Bitcoin was the big loser in cryptocurrency markets on Wednesday, down 5% on the day as investors weighed concerns about the Covid-19 omicron variant.
The worldâ€™s largest cryptocurrency was trading above $51,000 on Tuesday and began to drop below the $50,000 mark at around 10:30 a.m. coordinated universal time (UTC). As of press time bitcoin (BTC) was changing hands around $49,645.
Ether (ETH), the second largest cryptocurrency by market capitalization, was down 3% in the last 24 hours.
European stock markets wavered after witnessing a sharp rise on Tuesday as investors grew more cautiously optimistic after studies showed vaccines provide partial shield against the omicron variant.
Laurent Kssis, a crypto exchange-traded fund (ETF) expert and director of CEC Capital, a crypto trading advisory firm, said that both bitcoin and ether remain vulnerable to price pullbacks, fueled by leverage washouts. According to the data site Coinglass, some $187 million of crypto trading positions were liquidated over the past 24 hours.
â€œThis is skewed to long liquidations, which will inevitably put downward pressure on BTC,â€ said Kssis.
Glassnode data shows that support failed to hold and triggered a full wave of liquidations as the lower price was hit each time:
Looking forward over a longer-term horizon, bitcoin fundamentals remain â€œextremely strong,â€ and adoption and development trends are â€œundeniably bullish,â€ said Jason Deane, analyst at Quantum Economics.
He attributes the recent lack of market momentum to sentiment and technical trading more than anything else. â€œIt may well stay that way until enough momentum is achieved in either direction,â€ said Deane.
Over the last two weeks, bitcoin short momentum volume has increased two times over that of longs, according to Stack Fundsâ€™ weekly report.
â€œAdded pressures such as regulatory scrutiny, profit-takings and weaker accumulation trend have all played a part in this,â€ wrote Lennard Neo, head of research at Stack Funds.
Ecoinmetrics data shows that similar drawdowns in magnitude and duration were seen earlier this year that resulted in 20-40% declines, and after each time, the market recovered and extended to new highs.
Other tokens such as Polygonâ€™s MATIC token is up 6% in the last 24 hours, Chainlink (LINK) by 9.6% and Uniswap (UNI) by 2.5%, according to data from Messari.