In a turbulent turn of events, cryptocurrency traders faced staggering losses amounting to a staggering $1 billion in liquidations over the past 24 hours, according to data from Coinglass. The digital asset landscape experienced one of its most significant sell-offs this year, with the price of Bitcoin, the pioneer cryptocurrency, plummeting to a two-month low.
Bitcoin’s value nosedived by 7%, reaching approximately $26,900, with an earlier dip to nearly $25,000 marking its lowest point since June. Amid this price descent, the market saw the annihilation of around $821 million worth of long positions – investments made by traders betting on price surges. CoinGlass data reveals that the brunt of these losses was shouldered by Bitcoin traders, who endured a staggering $472 million in long liquidations. Following closely was ether, with $302 million in losses.
This unfortunate event marked the most substantial level of Bitcoin liquidations witnessed in a single day since June 2022, as indicated by data from Coinalyze. Coincidentally, this timeframe also witnessed Bitcoin’s price plummeting to a mere $17,000.
Crypto Meltdown Amid Economic Concerns
The liquidation saga unfolded against the backdrop of plummeting crypto prices during the afternoon hours of Thursday in the United States. This plunge not only transformed this month’s gradual downtrend into a bloodbath but also occurred alongside prevailing concerns within financial markets. Troubles ranged from the devaluation of foreign currencies to apprehensions about the Chinese economy and surging bond yields reaching multi-year highs. These factors collectively triggered a downward spiral in major cryptocurrencies like Bitcoin and Ethereum, leading to near double-digit losses and their lowest values since early summer.
Liquidations, a consequence of leveraged trading, transpires when an exchange forcibly closes a trading position due to the trader’s inability to meet margin requirements or uphold the necessary funds to sustain the trade. This mechanism is activated when asset prices experience a sharp decline, catalyzing a chain reaction of liquidations that exacerbates the extent of losses and further drives down prices.