Crypto Traders Experience Significant Losses As Market Undergoes Sharp Decline
Bitcoin recently plummeted to around $25,000 from its previous value, leading to a substantial drop in cryptocurrency values across the board. Traders faced approximately $1 billion in liquidation losses in a 24 hour period. This sell-off also marked one of the most severe downturns for digital assets this year.
Bitcoin witnessed a 7% drop to roughly $26,900, with an earlier dip to nearly $25,000, the lowest value since June. CoinGlass data reveals that about $821 million worth of long positions, which are bets on price increases, were eradicated as traders hurriedly exited their positions. Among these losses, BTC traders bore the brunt, with long liquidations amounting to $472 million, followed by ETH at $302 million.
This represents the highest volume of Bitcoin liquidations on a single day since June 2022, a time when Bitcoin plummeted to $17,000. The trigger for this downturn included concerns about collapsing foreign currencies, apprehensions about the Chinese economy, and surging bond yields to multi-year peaks.
Typically, when an exchange closes a leveraged trading position due to a partial or total loss of the given initial margin, which means that the trader fails to meet the margin requirements or does not have enough funds to keep the trade open, this is referred to as a liquidation. When asset prices fall, the dynamic can set off a chain reaction of liquidations, exacerbating losses and price declines.
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