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Crypto Market Struggles After Record Liquidations, Recovery May Take Months

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  • Lаrgеst liquidаtion еvеnt in crypto history suggеsts а potеntiаl low, but rеcovеry tаkеs timе.
  • Pаst еvеnts likе COVID, Lunа, аnd FTX took months, not dаys, for full rеcovеry.
  • Dеcеmbеr highs for most аlts mаy not rеturn for аt lеаst two months or longеr.

Thе  cryptocurrency mаrkеt is fаcing а tough pаth аhеаd, with еxpеrts prеdicting it mаy tаkе ovеr two months to fully rеcovеr. This downturn bеgаn аftеr formеr U.S. Prеsidеnt Donаld Trump’s tаriff thrеаts spаrkеd mаssivе crypto liquidаtions, rаising fеаrs of аn impеnding trаdе wаr. On Fеbruаry 3, thе crypto world witnеssеd whаt is bеing cаllеd thе lаrgеst liquidаtion еvеnt in its history.

Crypto аnаlyst  Matthew Hyland shаrеd his outlook in а Fеbruаry 4 X post, stаting, “You likеly won’t sее thosе Dеcеmbеr highs on most Alts for а minimum of 2 months if not longеr, so kееp еxpеctаtions tеmpеrеd аnd just еxpеct it to tаkе timе.” Hylаnd’s cаution comеs аftеr ovеr $2.24 billion wаs liquidаtеd from thе crypto mаrkеts within just 24 hours. Howеvеr, somе voicеs in thе industry bеliеvе thе аctuаl figurе might bе еvеn lаrgеr.

Bybit co-foundеr аnd CEO Ben Zhou bеliеvеs thе аctuаl liquidаtion figurеs аrе fаr highеr thаn rеportеd, еstimаting thе totаl to bе bеtwееn $8 billion аnd $10 billion instеаd of thе widеly citеd $2 billion. This mаssivе wаvе of liquidаtions аffеctеd ovеr 730,000 trаdеrs, highlighting thе еvеnt’s unprеcеdеntеd scаlе.

Bitcoin Drops Below $100K Amid Volatility

Thе biggеst singlе liquidаtion ordеr occurrеd on crypto еxchаngе Binаncе, involving аn ETH/BTC trаding pаir vаluеd аt $25.6 million, аccording to CoinGlаss. This liquidаtion wаs triggеrеd by growing concеrns ovеr Trump’s proposеd 25% tаriffs on Cаnаdа, Mеxico, аnd Chinа. Fortunаtеly, Trump pаusеd thе plаnnеd tаriffs on Cаnаdа аnd Mеxico аftеr nеgotiаtions, offеring tеmporаry rеliеf.

Bitcoin аlso took а hit. On Fеbruаry 3, its pricе droppеd to $92,584, fаlling bеlow thе psychologicаl $100,000 mаrk for thе first timе sincе Jаnuаry 27. Although Bitcoin briеfly surgеd аbovе $102,000 thе nеxt dаy, it soon fеll bаck аnd wаs trаding аround $98,061 аt thе timе of writing, аccording to TrаdingViеw dаtа.

BTCUSD 2025 02 05 09 21 04
Source: Trading View

Hylаnd suggеstеd thаt this dеclinе might indicаtе thе mаrkеt hаs hit its lowеst point. Howеvеr, hе cаutionеd thаt pаst disruptions in 2020 аnd 2022, which triggеrеd similаr mаrkеt turmoil, took morе thаn two months to fully rеcovеr. This suggеsts thаt invеstors should brаcе for а prolongеd rеcovеry pеriod.

Crypto Recoveries Rarely Happen Overnight

History providеs somе contеxt for thе currеnt downturn. In Mаrch 2020, thе onsеt of thе COVID-19 pаndеmic cаusеd Bitcoin to losе 47% of its vаluе in just two dаys, dropping to $5,017. Dеspitе thе shаrp dеclinе, Bitcoin rеboundеd аbovе $11,000 by August, mаrking а fivе-month rеcovеry pеriod.

Similаrly, in 2022, thе crypto mаrkеt fаcеd significаnt blows from thе collаpsе of thе Tеrrа blockchаin in Mаy аnd thе downfаll of thе FTX еxchаngе in Novеmbеr. Both еvеnts rеquirеd sеvеrаl months for thе mаrkеt to stаbilizе, rеinforcing thе еxpеctаtion thаt thе currеnt rеcovеry will not bе swift.

Xpost
Source: Matthew Hyland

Hylаnd еmphаsizеd thаt а quick rеbound is unlikеly this timе аs wеll. “A strаight rеcovеry in а mаttеr of dаys is just not likеly,” hе rеmаrkеd. “Evеn а V shаpе likе 2020 took wееks with mаny dips on thе wаy bаck up.” This highlights thе unprеdictаblе nаturе of thе crypto mаrkеt, whеrе pаtiеncе oftеn provеs to bе thе most vаluаblе strаtеgy.

Related Readings | Neptune Digital Assets Expands Crypto Portfolio with Bitcoin and Dogecoin Acquisitions

Terra Kingpin Do Kwon Dodges US Extradition

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Do Kwon’s extradition to the US faced a setback after the Montenegrin Court of Appeal ruled to annul the decision of the Podgorica High Court. According to an official statement, the Supreme Court in Podgorica earlier authorized Kwon’s extradition to the US for criminal prosecution for several criminal offenses on February 20. The decision to revoke the Supreme Court’s decision was made after the Court of Appeal found that there were serious violations of criminal procedure regulations in the original decision.

This meant the Terra kingpin won another appeal, further complicating the international legal proceedings against him. Now that the case has been sent back to a lower court, the High Court in Podgorica must decide again whether to send Do Kwon to the US or South Korea, according to a statement released on March 5. The Balkan nation’s justice minister must give final approval for any extradition.

Do Kwon
Terra Kingpin Do Kwon Dodges US Extradition 4

Before this, the U.S. Securities and Exchange Commission agreed to postpone Do Kwon’s civil trial, allowing the indicted co-founder to be extradited and attend the proceedings. The request for a delay until at least March 18, made by Kwon’s lawyer, was deemed justified by the SEC in a recent filing in a Manhattan federal court.

The regulator characterized the requested adjournment as “modest.” Importantly, there won’t be separate trials for Terraform and Kwon, as this would necessitate whistleblowers and retail investors to testify twice, an unnecessary burden.

Do Kwon: LUNA Up By 60%

As reported by TronWeekly, Kwon’s legal representation earlier assured the court that they wouldn’t seek further adjournments even if Kwon couldn’t attend on the new proposed date. In case the court rejects the plea for a further delay, Kwon’s counsel requested that the jury be informed that his absence and inability to testify should not be considered unduly prejudicial to him.

Following the news, the Terra protocol’s staking token, LUNA, is up 62% since the past week. Its algorithmic stablecoin, TerraUSD [UST], is pegged to stable assets like the U.S. dollar. However, holders of both TerraUSD and Luna lost a majority of their assets after the stablecoin plunged far below its $1 peg in the Terra debacle.

Bitcoin Hits $50K Amid Crypto Market Turmoil: Analysts Predict $84.5K Target

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Bitcoin is in the spotlight, breaking the $50,000 barrier not seen since December ’21. That’s broken through amid turbulent times while the digital currency faces volatility and a number of challenges. The characteristic volatile fluctuations of the cryptocurrency market witnessed a series of events. Besides, Luna has sharply crashed, and FTX went bankrupt. Moreover, Blockfi and Celsius have collapsed, thus causing questions as to the inviolability of BTC and the rest of the cryptocurrency ecosystem.

Despite hurdles, Bitcoin has been able to express remarkable resilience, thereby bolstering the notion that it is not a passing fad but an extremely powerful entity within the world of finance. The future seems to open much brighter for Bitcoin and, most importantly, for the whole market of cryptocurrencies, signifying endurance and future growth.

Crypto analyst Ali Martinez highlighted that this was the cycle of emotions that long-term Bitcoin holders usually go through while remaining bullish. He further explained that this cycle usually began with capitulation before the short time marked by corresponding price corrections, passing through hope, optimism, and belief. Subsequently, the market re-enters a phase of belief, signaling potential further gains ahead.

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At this time, it certainly looks as though the market has gone through another anxiety period and into a fresh phase of belief. That means further room to the upside is indicated for Bitcoin before hitting the peak of euphoria that would accompany the top of any bull cycle.

Bitcoin Soars: Analyst Predicts $84,500 Target Price

As of now, the price of Bitcoin stands at $50,023, with a 24-hour trading volume of $42.31 billion and a market capitalization of $981.79 billion. Over the past 24 hours, Bitcoin has seen a 3.66% increase in price, with a 17% gain in the weekly chart.

BTC 1D graph coinmarketcap 3
Source: CoinMarketcap

Moreover, further insights by the crypto analyst, CryptoCon, have been shared through an X post, highlighting the continuous relevance of Bitcoin Magic Bands. These bands have shown to be the right indicators for price movement in the past, and new data has indicated that the price is in a surge towards Blue Level 2 after recently breaking Yellow Level 1.

image 53

Unlike other mid-tops, which usually result in corrections at lower primary levels, Bitcoin is now retesting Level 2 at $49,600. In alignment with the chart analysis of CryptoCon, a strong break above a key level normally opens the way for a move towards the next level, in this case, which, stands at level 3, hanging overhead at $84,500.

However, the fact that Bitcoin could move up further only underscores the dynamic, ever-changing nature of the cryptocurrency market, with investors and analysts waiting to see how events play out through the upcoming weeks and months.

Crypto Analyst’s Saga: Lessons Learned From AVAX, SOL, & LUNA Rollercoaster

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In a recent thread of tweets, renowned crypto analyst Miles Deutscher reflects on the rapid rise and fall of cryptocurrencies $AVAX, $SOL, and $LUNA over the past 16 months. What started as a triumphant journey with all three coins trading above $100 eventually led to a mixed fate, with one currency plummeting to zero, another resting at $10, and the third falling behind. Deutscher, however, emphasizes that amidst the price volatility lie essential lessons for traders.

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The Hidden Key to Crypto Success

Deutscher’s first lesson is to comprehend the narrative hype cycle. Dividing it into three phases—pre-, mid-, and post-cycle—he underscores the significance of entering during the initial phases to maximize profits and limit losses. 

His analysis corroborates legendary investor Howard Marks’ assertion that even promising assets can become overpriced and vice versa. Deutscher’s advice: spot potential winners early.

In Phase 1, Deutscher insists on identifying the driving narrative of each cycle. For instance, during the previous cycle, the L1 narrative gained traction as Ethereum struggled with scalability, creating room for emerging projects like “SOLUNAVAX” to excel. 

The key, Deutscher believes, is to recognize upcoming challenges and identify projects poised to address them. Acting swiftly when the trend gathers momentum is crucial.

In lesson 3, Deutscher advocates for calculated risk-taking. Being discerning about when to seize opportunities and when to be cautious is imperative in crypto trading. Drawing from @0xWangarian’s insights, Deutscher shares that his past regret was not betting more when he had conviction. Balancing risk and reward is a paramount aspect of successful trading.

The final lesson warns against becoming a “bag holder.” While altcoins offer lucrative gains, they lack the stability of a store of value. Deutscher underscores the importance of incremental profit-taking on the way up to alleviate pressure when timing the peak. Vigilance is also essential during a narrative’s decline, as spotting early signs of fading momentum can prevent significant losses.

Deutscher concludes by admitting he didn’t master these lessons in the previous cycle, but the insights gleaned are invaluable for the next phase. He acknowledges the rapidly evolving nature of the crypto space but affirms that human emotions of fear and greed remain constant, offering traders an exploitable edge.

Related Reading | Dogecoin Defies Trademark Norms, Sparks Crypto Cheers

Bitcoin’s Price Surge Breaks Barriers, Signals Bull Market Revolution

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Bitcoin, the world’s largest cryptocurrency, has entered a full-fledged bull market cycle, according to renowned cryptocurrency analyst Ki Young Ju, the Co-founder, and CEO of Cryptoquant. 

The digital asset soared to new heights by finally surpassing the $30,000 mark, prompting Ju to make a bold declaration regarding BTC’s current trajectory.

Taking to Twitter, Ki Young Ju shared an intriguing insight. He pointed out that Bitcoin’s PER (miner revenue-based) ratio stands at an impressive 73, which has significant implications. 

Firstly, this suggests that the current price of Bitcoin is enticing for miners, providing them with an attractive opportunity to sell. Secondly, and more importantly, it signifies that we are indeed amidst a bull market cycle.

To understand the PER ratio, let’s break it down. PER, or Price-to-Earnings Ratio, is calculated by dividing the share price by the earnings per share. 

When it comes to Bitcoin, the PER can be determined by dividing the BTC price by the yearly miner revenue divided by the total supply of Bitcoin. 

While the revenue might not directly equate to net income, the emergence of cyclic patterns in the data further supports the assertion of a bull market cycle.

Bitcoin Monthly Transfer Volume Surpasses Baseline

In a parallel development, Glassnode, a prominent analytics platform, also shared the latest update on Twitter. They revealed that the monthly Transfer Volume of BTC has surpassed the yearly average baseline for the first time since the LUNA implosion. 

This milestone indicates a remarkable expansion in on-chain activity, signifying a positive trend in the network’s fundamental aspects and overall network utilization.

Moreover, Glassnode highlighted another significant metric. Following a brief loss period, Bitcoin’s SOPR (Spent Output Profit Ratio) has reestablished itself in a profit-driven regime. 

image 73

Notably, it rebounded decisively at the equilibrium position, reaching a value of 1.09. This resurgence in SOPR signifies that market participants are once again engaging in transactions with the primary motive of making profits.

The convergence of these factors paints a compelling picture for Bitcoin’s future. With the price surge above $30,000, the enticing PER ratio, the growing network activity, and the renewed profit-driven behavior of market participants, it becomes evident that Bitcoin is entering a bullish phase. 

Related Reading | Crypto.com Makes Strides in Spain: VASP Registration Confirmed 

Terra Creator Faces Prison Time For ‘Not So Obvious’ Reasons

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The news about Terra creator Do Kwon was announced on Twitter by Chinese cryptocurrency writer and blogger Colin Wu. About a year ago, Terraform Labs and the Terra ecosystem, which was supported by the LUNA token and the UST stablecoin, failed, sending the cryptocurrency market into a tailspin.

The Montenegrin court “granted” Kwon and his former CEO Han Chang-Joon a sentence of four months in prison. Both guys entered an innocent plea in court last Friday. Kwon and Han attempted to board a private flight from Montenegro to Dubai earlier this year while using forged passports of Costa Rican citizens. Additionally, since these two are accused of defrauding Terra’s investors before to the company’s collapse last year, officials in the US and South Korea are insisting on their extradition. Investor losses totaled about $60 billion.

Kwon, however, refuted the allegations and claimed in court that he had obtained the passport through a Singapore travel agency. The former “crypto king” asserted that he believed it to be a “golden passport,” or a legal document. People who make big investments in particular nations and expedite their citizenship acquisition are given this type of passport.

Terra Classic (LUNC) Community Caps Price For June

The eagerly awaited Parity Upgrade was successfully finished and carried out on June 14, 2023 by the Joint L1 Task Force (L1TF), which is made up of prominent Terra Classic developers. It is important to note that the Parity Upgrade project became feasible as a result of the Terra Classic community’s continued support for proposal 11561. Additionally, the Parity Upgrade has full support from industry titan Binance, demonstrating the new project’s status as a significant inclusion.

Despite the pessimistic forecast for the cryptocurrency industry, Terra Classic (LUNC) surged to the top of the cryptocurrency rankings after a phenomenal 7-day rise.

However, on June 16, LUNC struggled to make a statement that would set it apart from becoming the day’s most prominent underperforming crypto project. Holders of LUNC tokens are uncertain as a result of this unique downward trend that was detected on June 16.

Terra’s Do Kwon Might Be Handed Maximum Prison Sentence; Here’s Why

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Terra’s Do Kwon may face multiple prison times both in South Korea and the US, a senior South Korean prosecutor who is leading the investigation told Bloomsberg.

According to Dan Sunghan, before prosecution, a convict is subject to multiple cross-border sentences for some of the crimes in one of the jurisdictions.

The Terra founder may be extradited to the US for trial after serving his term in South Korea, which could be over 40 years if South Korean officials do not account for all of his accusations there, Sunghan explained.

It is important to note that the South Korean and American governments both asked for his extradition to their respective nations, and such a request can take up to nine months to process, according to the prosecutor.

Additionally, the crypto entrepreneur’s extradition to South Korea made more sense “when it comes to bringing justice or recovering the damages for victims,” as local authorities have access to more evidence when compared to their American counterparts.

Kwon might also be given “the longest sentence ever handed down in South Korea,” the prosecutor claimed. “This is the largest financial fraud or financial securities fraud case that has ever happened in South Korea,” Sunghan added.

The infamous crypto tycoon and his associate Han Chang Joon were granted bail by the Montenegro court for $436,000 each along with being put under house arrest.

As per the official notice published by local authorities on May 12, the court had set the bail at EUR 400k for each of the defendants and ordered that they be released upon payment of this amount. 

Montenegro authorities arrested the elusive co-founder after he was caught using fake travel documents. The bail came after Kwon’s attorneys had submitted their request for such terms to the Montenegrin authorities.

Terra Co Accused Made His First Court Appearance

Meanwhile, Daniel Shin, Kwon’s long-time business partner and one of the founders of the doomed crypto project appeared in court at the Seoul Southern District Court for his first trial on May 26.

Shin, a co-accused in the stablecoin project failure was recently indicted by South Korea on violations of capital-markets law among other charges.

He and nine other staff members of Terraform Labs face multiple charges, for illegal trading; two others are accused of breach of trust.

Bitcoin: A Saga Of Unflinching Support And Perseverance

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Bitcoin users have shown unwavering support and continue to display resilience in the face of cataclysmic implosions of both LUNA and FTX.

A new study led by Glassnode shared that there are now over 5.4 million more distinct Bitcoin addresses with non-zero coin balances than there were before, indicating that network adoption is still steadfast.

The number of unique Bitcoin addresses with a non-zero amount of coins users increased by over 1.06 million between the LUNA-Terra crash and the FTX bankruptcy, and by over 4.36 million from the FTX event to the present.

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Bitcoin: A Saga Of Unflinching Support And Perseverance 11

The collapse of Terra in May 2022 marked the first major run in crypto, wiping out more than $200 billion in space. It also contributed to the collapse of several other key players in the ecosystem.

The ripple effects of this triggered a chain of similar updates across the sector that impacted investors worldwide as prices nosedived due to fear.

Ironically, the Terra fiasco led to a huge liquidity crunch, and several crypto platforms were hit by massive withdrawals including SBF-led FTX.

Investors’ fear was further exacerbated by reports of leaked balance sheets and allegations that Bankman-Fried’s trading firm Alameda Research was being lent FTX customers’ funds.

According to a BBC report, the exchange owed its 50 biggest creditors roughly $3 billion.

Bitcoin: The Rise Of “Whole-Coiners” And Unexpected Milestones

The global financial system experienced significant disruption in 2022, which was ultimately one of the biggest tests for the cryptocurrency market.

Despite losing almost 65% of its value, Bitcoin continued to expand strongly in the last months of the year, especially in terms of the number of “whole-coiners”—people who own at least one complete Bitcoin.

According to an earlier Glassnode report, the number of addresses holding 100 Bitcoin or more has increased by 200 addresses in just four days.

On the other hand, 2023 was marred by the collapse of multiple banks, yet BTC seemed to profit from the upheaval. In mid-March, the leading crypto crossed the $30k threshold for the first time since June 2022.

And even after the most recent Binance and Coinbase lawsuits, which created quite a stir in the crypto market, BTC has risen and is up nearly 5% in late-afternoon market trade at $26913.

With crypto assets being inherently volatile, historical trends provide an excellent window into what the future may bring.

Although it’s difficult to predict BTC’s precise trajectory, the asset has sailed through troubled times even in the current situation where regulations around the world, notably in the US, have tightened the noose.

Terra Kingpin Do Kwon Granted Bail By Montenegro Court

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The former CEO of the Terra blockchain Do Kwon and his associate Han Chang Joon were granted bail by the Montenegro court for $436,000 each along with being put under house arrest.

As per the official notice published by local authorities on May 12, the court has accepted the offered bail of EUR 400k each for the defendants and ordered that they be released upon payment of this amount. 

“If the defendants escape or violate the supervision measure, the bail is forfeited and entered into a special section of the budget for the work of the courts,” the court warned.

As stated in the bail document, they also promised that if bail is set, they will not hide until the end of the criminal proceedings, that they will regularly respond to court summons, and that they will be available at the address provided by their defense attorney.

Following his arrest by Montenegro authorities due to using fake travel documents, the Terra founder pleaded not guilty at the Basic Court in Podgorica, according to a Bloomberg report.

The bail came after Kwon’s attorneys had submitted their request for such terms to the Montenegrin authorities.

A year ago, the collapse of TerraUSD [UST], the stablecoin created by Terraform Labs became one of the crypto industry’s worst debacle as it wiped out tens of billions of dollars for investors. 

Since then, Kwon and his staff have been slapped with lawsuits in Korea, Singapore, and the U.S. stemming from TerraUSD’s collapse. 

Meanwhile, Daniel Shin, Kwon’s long-time business partner and Terra co-founder is set to make a formal court appearance at the Seoul Southern District Court for his first trial on May 26, TronWeekly reported the other day.

Terra’s Do Kwon Assets Seized After This

Shin, a co-accused in the stablecoin project failure was recently indicted by South Korea on violations of capital-markets law among other charges.

He and nine other staff members of Terraform Labs face multiple charges, for illegal trading; two others are accused of breach of trust.

In addition to that, a Seoul Court gave the green signal to seize $176 million in assets owned by Do Kwon after local reports emerged that the disgraced founder had allegedly concealed $100 million in a Swiss bank account.

Terra Founder Stashed 91.4B Assets Elsewhere, Not In South Korea- Report

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Do Kwon, Terra’s disgraced co-founder has “zero” identifiable assets in his native South Korea, Seoul Southern District Prosecutors confirmed to KBS.

According to a report from national news broadcaster KBS, local officials have acknowledged that none of Kwon’s assets are under their authority, but they claim that around 91.4 billion won of the whole amount belong to him.

A domestic property affiliate of Kwon Do-Hyung, however, only identified by “0 won,” was not included in the scope of the provisional seizure.

Moreover, Shin Hyun-Seung, also known as Daniel Shin, the second founder of Terraform has had his assets temporarily taken by the authorities.

Property and imported cars are among the confiscated assets. According to the prosecutors, Shin made illegal earnings of more than 154 billion won from the failed Terra-Luna project.

Furthermore, South Korean authorities claim that nine employees, including former and current Terraform Labs leaders, illegally earned roughly 414.5 billion Korean won [$314.2 million] from the project.

There has currently been a thorough hunt for domestic properties that were purchased with the enormous riches they received from Terra.

The property freeze procedure, which entails imposing foreclosure on flats and foreign vehicles owned by former executives and others, is the first step towards retrieving the proceeds of crime, the report noted.

But what surprised the investigators was that CEO Kwon, the former CEO who amassed tens of billions in illegal profits, did not own any property in Korea.

Terra’s Do Kwon Might Have Moved His Assets Into Overseas Exchange

An official from the prosecution said, “It was found that there is almost no property owned by CEO Kwon in Korea.”

The report also makes the assumption that the founder of Terra has converted a significant portion of his assets to Bitcoin and moved them to an international exchange for digital assets.

Meanwhile, prosecutors stated they had requested Binance, the biggest exchange in the world, to prevent CEO Kwon from withdrawing any cryptocurrencies.

Recently, the Kwon’s attorneys reportedly disputed US jurisdiction, while on the run as reported by TronWeekly.

Just two weeks before, the CEO was detained in Montenegro while attempting to board a flight using fictitious documents to conceal his identity. Both the United States of America and South Korea requested his extradition once his true identity was established.