The cryptocurrency market recently experienced a major shock, with trader liquidations reaching $1.13 billion.
The event followed significant price fluctuations in Bitcoin (BTC), highlighting the volatile nature of the crypto sector.
Bitcoin crashes by 14% after tapping ATH
On Tuesday, the leading cryptocurrency, Bitcoin, surpassed its all-time high, at one point exceeding $69,000. This peak comes after a long wait of 847 days and shows bullish momentum in the market. However, this upward trend did not last long.
After that, a wave of selling pressure appeared on virtual currency exchanges. This pressure dramatically reversed Bitcoin's rise, causing its price to plummet below $60,000 at one point.
Initially, the price of Bitcoin soared to $69,208. It then plummeted, dropping more than $1,000 in one minute. The decline didn't stop there. Prices plummeted, reaching a low of $59,300. At the time of writing, BTC has partially recovered and is trading around $63,261.
Additionally, other major cryptocurrencies also had mixed reactions. Solana (SOL) and Ethereum (ETH) recorded declines of 5.92% and approximately 4%, respectively. In contrast, meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB) faced losses of more than 20% in the past 24 hours.
This dramatic price movement led to a significant liquidation event. Derivative trading positions worth $1.13 billion were eliminated across all digital assets. According to Coinglass data, $879.68 million of this amount was in long positions. In addition, $254.8 million was in short positions. A total of 308,465 traders were liquidated as a result of the disruption.
Read more: Where to trade Bitcoin futures: A comprehensive guide
Liquidation is a pivotal moment in the crypto market. These occur when an exchange closes a leveraged position because the trader's margin falls below the required maintenance margin.
Such events can amplify market volatility and deepen price declines. Tuesday's settlement highlights the high risk of crypto trading. This is on top of the $1 billion leveraged flash from last August.
Experienced traders likened Tuesday's events to the most severe market decline. These moments serve as a reminder of the risks and volatility inherent in cryptocurrency trading.
“I think my worst day in crypto was in March 2020. It was the day of liquidation. The liquidation engine started going into overdrive, so I turned Bitmex down to prevent BTC from going to 0. When we had to shut down. Everything dropped over 70% in one day,” said Pentoshi, a crypto trader. Said.
Read more: 13 Best AI Crypto Trading Bots to Maximize Profits.
Therefore, investors and traders are advised to exercise caution, especially when it comes to leveraged positions.
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