Bitcoin fell almost 15% to $51,000, causing a seismic shockwave in the cryptocurrency market. With the cryptocurrency plunging more than 15% and now trading at $51,500, investors in Bitcoin were delivered a jolt on opening day. A series of crypto liquidations were forced to cancel contracts worth over $1 billion in bitcoin futures as a result of this sharp decrease.
The Price of Bitcoin Has Dropped by Over 15%
Bitcoin fell almost 15% to $51,000, causing a seismic shockwave in the cryptocurrency market. With the cryptocurrency plunging more than 15% and now trading at $51,500, investors in Bitcoin were delivered a jolt on opening day.
A series of Crypto liquidations were forced to cancel contracts worth over $1 billion in bitcoin futures as a result of this sharp decrease.
The Price of Bitcoin Has Dropped by Over 15%
The graph makes it clear that the recent steep decline in bitcoin’s price is only a continuation of the pattern that the commodity has been experiencing since the final few days of July.
The cryptocurrency has dropped by more than 26% in only one week. As of the 29th, it was trading for over $70,000. After this decline, the price of Bitcoin returned to where it was shortly before the late February surge, which resulted in a new all-time high (ATH).
Although Bitcoin has had a difficult day, altcoins have had an even worse day overall. With the exception of the stablecoin Tether, the three biggest currencies after the original (ETH, BNB, and SOL) have all seen larger losses of 23%, 19%, and 21%, respectively.
It’s hardly shocking that long investors have suffered greatly on the derivatives side of the market, given the collapse of sector prices.
The Tsunami of Liquidation
The futures market experienced the majority of the volatility, as traders wagered on the future price of cryptocurrencies.
Traders who had placed bets on the expectation that Bitcoin’s price would climb were taken off guard when it fell. Margin calls, which are requests for extra money to cover possible losses, overwhelmed a lot of people.
These traders exacerbated the downward pressure on prices by liquidating their holdings when they couldn’t fulfill the margin requirements.
CoinGlass, a top site for tracking crypto liquidations, recorded a remarkable $1.1 billion in liquidations in a single day. This number highlights how bad things are in the market and how much financial agony traders are having.
The majority of crypto liquidations, which have exceeded $1 billion, are long contracts.
Bitcoin futures contracts worth an astounding $1.1 billion had been liquidated.
In this context, “liquidation” refers to the process where a platform forcefully ends a contract after it accumulates a specific amount of losses. This is a standard procedure for every contract.
Approximately 85% of these liquidations, or the vast majority, concerned the long holders. This is an inevitable result of the market’s overall collapse.
It is evident that BTC continues to lead, but very narrowly, which is unusual. The recent introduction of spot exchange-traded funds (ETFs) may have increased interest in ETH, the second-largest cryptocurrency by market capitalization. This surge in interest could be the cause of the heavy liquidations.
About $163 million of the remaining funds were used for short trading.
Huobi was the subject of the greatest single liquidation order, totaling $27 million.
According to the data, Bitcoin accounted for $375 million of liquidations, with Ethereum coming in second at $354 million. The liquidations included about $109 million in other assets.
Binance tops the list of individual exchanges with a $427.6 million liquidation. Of this, $71.61 million was in short positions, while around $356.01 million was in long holdings.
OKX ranks second with total crypto liquidations amounting to $334.47 million—approximately $275.18 million in longs and $59.29 million in shorts.
Huobi finally reported liquidations of $150.43 million, or around $141.22 million in longs and $9.21 million in shorts.
As a result, according to Coinglass, the total open interest in cryptocurrencies dropped by 18.7% and is presently at $47 billion.
Liquidations follow strong negative sentiment in the crypto markets. This is driven by factors such as a tough geopolitical environment, high US unemployment, and a global market downturn fueled by recession fears.
According to CoinGecko Data, the total market value of all cryptocurrencies fell to $1.86 trillion, down 17.1% in the last day. However, on the last day, the total trading volume of all cryptocurrency assets reached $236 million.
Following the crash, the two most valuable crypto assets saw sharp price declines, reaching multi-month lows. Ethereum fell below $2,300 for the first time since January, while Bitcoin unexpectedly fell below $50,000 early on Monday morning.
Conclusion
It is evident that BTC continues to lead, but very narrowly, which is unusual. The recent introduction of spot exchange-traded funds (ETFs) may have increased interest in ETH, the second-largest cryptocurrency by market capitalization. This rise in interest could explain the heavy liquidations.
