Over the course of the last 24 hours, the crypto market has undergone a huge correction, with Bitcoin falling to its lowest position in more than a month in the process.
A wave of liquidations was initiated due to unexpected decline, which resulted in the loss of long positions worth more than $700 million that were held by bullish traders.
The value of the most prominent crypto, Bitcoin (BTC), experienced a significant decrease, falling below $65,000 for the first time since March 6th.
Shockwaves were sent through the market as a result of this decline of almost 6%, which raised concerns about the possibility of a further downturn. There is still a lack of clarity regarding the reasons behind the current decline; however, analysts point to a number of issues, including the following:
A cascade of liquidations was initiated as a result of the abrupt drop in price, particularly for leveraged long positions. Traders who take these positions, in which they borrow money in order to increase the likelihood of their prospective winnings, also increase their losses when the market swings against them.
A great number of traders were compelled to sell their holdings at a loss in order to satisfy their margin obligations as a result of the sudden drop in Bitcoin’s price.
This information comes from Coinglass, a crypto derivatives tracker, which reports that over seven hundred million dollars’ worth of long bets have been liquidated across a variety of crypto exchanges in the past 24 hours.
When it comes to a volatile market like crypto, this chart demonstrates how vulnerable positions may be when they are overloaded with leverage.
