Crypto Market Corrects After Steep Rally

The crypto market has taken a downturn after a week of soaring prices, with Bitcoin dropping around 3% in 24 hours to trade at approximately €72,950.

This correction is largely seen as a natural response to the steep climb, which pushed Bitcoin back above $87,000 for the first time since January.

The rally was driven by an exemption from the U.S. Securities and Exchange Commission that allowed tokenized U.S. stocks to trade on blockchains for five years.

However, a significant part of the rise came from the derivatives market, where many traders who had bet on falling prices were forced to close their positions, causing a short squeeze that pushed the price even higher.

The excessive leverage in the market is now taking its toll, with every forced liquidation creating additional selling pressure and triggering further liquidations.