The price of bitcoin drops below $60,000 as a surge in long liquidations causes cryptocurrencies to plummet.

On Tuesday evening, cryptocurrencies experienced a decline as Asia futures indicated a lower direction, resulting in a wave of liquidations on the Bybit exchange.

According to Coin Metrics, the price of Bitcoin tumbled more than 8% to $2,457.61, which was the last time it was lower by 6.2% at $59,504.68.

"Steven Lubka, head of private clients and family offices at Swan Bitcoin, stated that crypto markets moved down sharply, resulting in a leverage-driven liquidation. This was triggered by a significant drop in Ethereum, which has been underperforming Bitcoin all year."

Centralized exchanges have witnessed $93.52 million in long ether liquidations, forcing traders to sell their assets at market price to settle their debts. Additionally, $85.93 million in bitcoin liquidations have taken place.

"Great buying opportunities arise from leverage-driven flushes," Lubka stated. "Although I anticipate markets to purchase the dip on bitcoin, Ethereum may face challenges until investors have a compelling reason to be optimistic about the asset."

Bitcoin has gained 39% for the year, while ether has only achieved a 7% increase.

"Ryan Rasmussen, an analyst at Bitwise Asset Management, stated that the whipsaw liquidations and price action observed in the market are typical of bull markets. He explained that bulls tend to overestimate and overshoot, resulting in significant losses, which are then followed by bears experiencing the same fate. When viewed from a broader perspective, a 5% move in the price of bitcoin is insignificant."

Despite August being a typically calm month for crypto and risk assets, this year it has been unusually volatile. However, cryptocurrencies are no strangers to significant pullbacks during bull markets. Bitcoin has remained stable within its range of $55,000 to $70,000 since April.

The crypto market experienced a faster retracement on Tuesday after news emerged that a federal grand jury in Washington, D.C. had indicted former President Donald Trump on charges of election interference.

The Democratic candidate, Vice President Kamala Harris, has not yet publicly stated her stance on the crypto industry, while Trump has positioned himself as the pro-crypto candidate in the upcoming U.S. presidential election.

"Bartosz Lipiński, CEO at crypto trading platform Cube.Exchange, stated that traders typically go risk-off to cash in during unstable environments, as they dislike instability. This may be the case today."