The current week is clearly testing the patience of crypto enthusiasts. We are talking about the massive selloff in almost all digital assets, which forced many buyers to capitulate. On Tuesday, trading platforms liquidated a total of more than $2.4 billion worth of positions.
According to the data from ByBt service, exchanges forcibly canceled the positions of 304,000 traders. Orders were closed against the backdrop of the largest market crash since February 2021. In just a few days, the BTC/USD rate plummeted to $38,500, losing about 20% of its value. The largest share of liquidations fell on Bitcoin. In second place was Ethereum, with its $527 million of positions liquidated.
Most experts believe that the selloff was triggered by yet another tweet from Tesla (NASDAQ:TSLA) CEO Elon Musk, who hinted that his car company could sell all of its Bitcoin holdings on its corporate balance sheet. Later, Musk clarified that Tesla most likely would not do this and that he was again misunderstood. However, he still received a decent share of criticism and accusations for provoking panic in the market. Apparently, investors understand that there is no smoke without fire.
Hardly had the market recovered from Musk's destructive comments when more bad news came. China banned financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative crypto trading. In a statement, three state-backed industry associations said that financial institutions must not provide saving, trust or pledging services of cryptocurrency, nor issue financial product related to cryptocurrency. It highlighted the risks of cryptocurrency trading, stressing that digital currencies are "not supported by real value," their prices are easy to manipulate, and trading contracts are not protected by Chinese law.
In fairness, it's worth noting that there has been no normal cryptocurrency market in China since 2017 when the authorities closed all national cryptocurrency exchanges. Back then, they accounted for more than 90% of the world's total trading volume, which later migrated to foreign exchanges. Considering the above, we believe that market pessimism caused by the recent events in China will not last long, so as the selloff. In addition, buyers can be supported by another optimistic tweet by Elon Musk at any time now, especially in light of his real losses due to the last market drop.
In other words, we recommend viewing the current selloff as the opportunity to go long. Institutional investors seem to be supporting this idea. Earlier it became known that MicroStrategy acquired another 229 BTC for $10 million at an average price of $43,663. That being said, the priority remains bullish. We suggest that you keep your long BTC positions. The target is still located at $100,000.