Bitcoin and Ethereum Experience Major Price Drop, Nearing $600 Million in Liquidations

Bitcoin, Ethereum, and various other cryptocurrencies have experienced a significant decrease in value over the past 24 hours, leading to a substantial long squeeze in the derivatives markets.

Key Takeaways

Liquidations in the cryptocurrency market reached almost $600 million in the last day.
Approximately $584 million of these liquidations involved long positions, which is about 90% of the total.
Ethereum accounted for the largest share of liquidations, surpassing Bitcoin significantly.
Currently, Bitcoin's price is around $87,200, reflecting a drop of over 3% in the past week.

Bitcoin & Ethereum

Major Liquidations in the Crypto Market

Recent data from CoinGlass indicates that the latest sharp price movements in cryptocurrencies have resulted in a wave of liquidations in the derivatives market. In this context, "liquidation" is the forced closing of open contracts after incurring losses beyond a certain threshold. For those holding long positions, liquidation occurs when asset prices fall, while those with short positions face liquidation when prices increase.

The extent to which prices need to move to trigger liquidation depends on the platform's specific percentage threshold and the level of leverage chosen by traders. During sharp price declines or increases, positions that have high leverage are usually the first to be liquidated.

The past day has seen considerable volatility in Bitcoin and other digital assets, catching many traders off guard in the derivatives market. As illustrated in the table below, the total liquidations topped $650 million within 24 hours.

Bitcoin Liquidations

In this wave, about $584 million involved long positions, accounting for nearly 90% of the overall liquidations, highlighting the significant price fluctuations during this timeframe.

Breakdown of Liquidations Among Cryptocurrencies

Interestingly, Ethereum, rather than Bitcoin, emerged as the primary contributor to the liquidation event.

Bitcoin Vs Ethereum Vs Other Cryptos

Ethereum saw over $235 million in contracts liquidated, significantly outpacing Bitcoin's $186 million. The higher liquidation figure for Ethereum may be attributed to its more substantial price drop over the last day.

In the altcoin market, Solana led with $37 million in liquidated positions, followed by XRP at $16 million and Dogecoin at $12 million. Notably, Solana's losses were relatively smaller compared to the other two altcoins.

On-chain Analysis

In light of the recent decline, Bitcoin has fallen below a crucial on-chain price level, as shown in a chart shared by the analytics firm Glassnode.

Bitcoin Price Models

The level referred to is the Active Realized Price, which represents the cost basis of active participants on the Bitcoin network. Currently, this level is pegged at $87,900, exceeding the current market price for Bitcoin. As a result, the latest price drop has placed active investors in a state of net unrealized loss.

Current Bitcoin Value

As of the time of writing, Bitcoin is trading around $87,200, marking a decrease of over 3% in the past week.

Bitcoin Price Chart

The price trend for Bitcoin appears to have declined noticeably over the past few days.