Crypto Market Crash Wipes Out $580 Million
LUCKNOW (CoinChapter.com) — The crypto world experienced a major setback yesterday as prices plummeted across the board. This sudden crypto market crash led to a total of $580 million in loss. All this started during early Asian trading hours when traders noticed some unusual activity. A digital wallet linked to Mt. Gox suddenly sprang to life. Mt. Gox was once the world’s largest Bitcoin exchange before it collapsed in 2014, and any movement associated with it tends to draw trader’s attention.
Crypto Market Crash: Major Cryptocurrencies Tumble Up to 18%
As word spread about Mt. Gox wallet activity, panic began to set in. Bitcoin, the first and largest cryptocurrency, saw its value drop by 8%, briefly dipping below the $54,000 mark. This erased all the gains it had made since February.
Bitcoin value plummeted and reached $54k mark. Source: CoinMarketCap
But Bitcoin wasn’t alone in its fall. Ethereum, often seen as Bitcoin’s main rival, took an even harder hit, dropping by over 10%. Other popular cryptocurrencies like Solana and Cardano weren’t spared either, both declining by 8%. Perhaps the most dramatic fall was experienced by Dogecoin which plunged by 18%.
Related Post: Top Crypto Market Losers: Bitcoin, ETH, XRP, Toncoin, and BNB
Leveraged Positions Led to Mass Liquidations
As the crypto market crashed, a domino effect began to unfold. Many traders in the cryptocurrency market use a risky strategy called leverage, where they borrow money to increase their potential profits. However, this strategy can backfire spectacularly when prices fall, and that’s exactly what happened.
Moreover, when the value of cryptocurrencies dropped, many of these leveraged traders couldn’t meet the requirements to keep their positions open. As a result, their accounts were automatically closed or “liquidated.” This forced selling drove the prices even lower.
The scale of the liquidations was enormous. Data from Coinglass showed that over $580 million worth of positions were forcibly closed. Bitcoin and Ethereum traders were hit particularly hard, accounting for more than $380 million of the losses. In one extreme case, a single Ethereum trade worth $18.4 million was liquidated on the Binance exchange.
Liquidation of over $580M worth of crypto. Source: Coinglass
Above all, the crypto market faces continued uncertainty as the Mt. Gox has already started repaying its creditors after years of legal battles. Looking ahead, this could potentially flood the market with more Bitcoin and Bitcoin Cash, possibly driving prices down further.
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