Cryptocurrencies are known for their volatility, but that was pushed to the max today as Bitcoin (BTC -2.33%) jumped as much as 12.6% to over $64,000 for a moment only to plunge to $59,000 an hour later. At 3:30 p.m. ET, the cryptocurrency is trading at around $60,000 and is still up 5% over the past 24 hours.
The entire market followed Bitcoin's move, but Ethereum (ETH -0.89%) and Dogecoin (DOGE -4.26%) were two of the more notable movers. Ethereum jumped 7.4% at its peak only to fall back to flat for the day. Dogecoin regained most of its late afternoon pop and is up 13% on the day.
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Bitcoin's liquidation spree
When assets move quickly, it often causes a squeeze on leveraged positions. When a stock or cryptocurrency rises, this is known as a short squeeze where short-sellers are forced to buy to cover losses, fueling the rally further. According to Coinglass, in the last 24 hours, there were $175.5 million in short leverage positions liquidated for Bitcoin and $363 million across crypto, which could have fueled the run-up.
But on the way down the opposite is true. Leverage long positions must be sold, which causes the drop to accelerate. In the past 24 hours, $85.9 million in long Bitcoin positions and $336.4 million in crypto long positions were liquidated.
Coinbase throws the industry for a loop
It didn't help that Coinbase Global had a glitch on its app that caused customers to see a zero balance. That caused some people to be unable to trade during this period of high volatility.
CEO Brian Armstrong said there was an over 10x increase in traffic to the company's apps during this period. That shows just how much trading was likely taking place in a very short period of time.
Ethereum and Dogecoin follow Bitcoin's lead
The move in Ethereum comes about two weeks ahead of the upgrade being called Dencun, which is expected to make the blockchain less expensive and faster. That could increase the utilization of Ethereum as a token for real-world utility.
It has also helped that the rise in Bitcoin following the launch of Bitcoin ETFs has led to speculation that Ethereum ETFs could be next. This is the second-largest cryptocurrency and would make sense as the next crypto ETF given the scale and name recognition.
Dogecoin also has name recognition and as a memecoin that's driven by sentiment on most days, it's not surprising to see the token up big today. But that doesn't mean the move will last because there's no fundamental change in the token from just a day ago.
Where do Bitcoin and crypto go from here?
The one thing that is certain is that crypto will be volatile in the future. What's less clear is where prices are headed.
The crypto industry is driven largely by sentiment and over the last few months the sentiment has been strong for both crypto and growth stocks, which are usually correlated with crypto values.
If momentum continues, values could easily go higher. But keep in mind that the momentum could turn quickly if the market goes south.
