Bitcoin (BTC) experienced a sharp decline of over 3% at the beginning of Asian trading hours, falling from over $65,500 to nearly $64,000 within minutes. This sudden plunge resulted in the liquidation of over $250 million in bullish bets, marking the most substantial liquidation event since early July. The drop occurred as Asian markets reacted to a broader stock market downturn and a weakening sentiment for risk assets, including cryptocurrencies.
Market Reactions and Liquidations
The significant drop in Bitcoin prices led to extensive liquidations across various exchanges. Binance saw the highest liquidations, with $118 million wiped out, of which 88% were long trades. OKX and Huobi, popular among Asia-based traders, recorded up to 94% of long positions being liquidated. Ether (ETH) also suffered, with long positions worth $100 million being liquidated following a 7.5% decline due to outflows from the newly launched ETH ETF.
Liquidations occur when an exchange forcefully closes a traderâs leveraged position due to a partial or total loss of the traderâs initial margin. This data serves as a signal of leverage being effectively washed out from popular futures products, indicating a short-term decline in price volatility.
Conclusion
The sharp drop in Bitcoin and other cryptocurrencies underscores the interconnectedness of global markets. The tech stock slump in the U.S. led to significant sell-offs and liquidations in the crypto market, affecting traders worldwide. This event highlights the importance of monitoring broader market trends and their potential impact on cryptocurrencies.
