$640 Million in Leveraged Positions Liquidated as Bitcoin Drops to $85K

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Key Takeaways

Bitcoin fell nearly 5% on Monday, declining to $85,610.
This drop resulted in over $640 million liquidated in leveraged positions across major exchanges.
More than 218,000 traders were wiped out within 24 hours, predominantly those holding long positions.
The decline lacks a direct news trigger, suggesting structural weaknesses in the market.

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Summary: On Monday, the cryptocurrency market faced significant turmoil as Bitcoin experienced a sharp decline, leading to substantial liquidations in leveraged positions. The market's abrupt shift not only affected Bitcoin but also had a ripple effect on other cryptocurrencies.

Bitcoin Experiences a Sudden Decline After Weekend Stability

Bitcoin had shown relative stability over the weekend, trading around $91,500 as it tested a crucial resistance zone close to $93,000. This period was part of a consolidation phase as the month was coming to a close. However, that stability quickly vanished on Monday, with Bitcoin dropping nearly 5% in just four hours to reach $85,610 on Binance. This decline followed its first positive weekly close in four weeks, finishing at $90,360. The rapid drop set a troubling tone for the rest of the market.

Analysts Identify Leverage Unwinding as a Cause for the Decline

The sell-off intensified, with analysts from The Kobeissi Letter linking the decline to a sudden increase in selling volume. They explained that this spike in selling triggered a chain reaction within leveraged positions, amplifying the downward pressure. Importantly, they noted that the decline did not stem from any obvious news events, indicating that the current market weakness is largely structural instead. Despite the volatility, they reassured that this downturn does not reflect a fundamental breakdown in the cryptocurrency market.

High Liquidations as Over 218,000 Traders Are Affected

The swift change in the market had immediate impacts on traders employing leverage. According to data from Coinglass, over 218,000 traders were liquidated within a single day, resulting in total liquidations of around $640.34 million. Notably, most liquidations occurred in the last 12 hours, causing losses of $579.11 million. The majority of these liquidations were from long positions, signifying a sudden shift in previously bullish sentiment.

Crypto Market Liquidations

Long Position Traders Suffer the Most

Data from Coinglass indicated that during the 12-hour window, long positions were responsible for $546.80 million of liquidations, while short positions accounted for just $32.31 million. For the full 24-hour period, long liquidations totaled $565.56 million, compared to $74.78 million for shorts. This discrepancy highlights how many traders had anticipated further increases when the downturn occurred. The largest individual liquidation event took place on Binance, involving an ETH/USDC leveraged position valued at $14.48 million, showcasing the extent of exposure among major trading pairs during this sudden market correction.

From an asset-specific viewpoint, Bitcoin experienced the most considerable liquidation volume, amounting to $204.44 million. Ethereum followed at $159.58 million, and Zcash (ZEC) ranked third with liquidations of $21.36 million, illustrating that the broader market mirrored Bitcoin's abrupt decline.

Disclaimer: This content is for informational purposes only and should not be interpreted as financial advice. The opinions expressed in this article may reflect the author's views and do not necessarily represent those of The Crypto Basic. Readers are encouraged to perform their own research before making any investment choices. The Crypto Basic bears no responsibility for any financial losses.