The recent Bitcoin price surge has caused a wave of liquidations in the cryptocurrency market. Over the past 24 hours ending March 12th, more than $361 million worth of leveraged trades were forced to close due to sharp price swings.
The price volatility primarily impacted traders who were bullish on Bitcoin, holding “long positions” betting on a price increase. According to data from Coinglass, these long positions accounted for $258 million of the liquidated funds, a significantly larger share compared to the $103 million lost by short sellers betting on a price decline.
This event marks the most significant long position liquidation since early March, when Bitcoin experienced a similar price correction after reaching a previous all-time high.
While the price movement triggered liquidations, it wasn’t as dramatic as the previous correction. Bitcoin’s price fluctuated within a 4.85% range between its daily high of $72,733 and a low of $69,365, according to CoinGecko. At the time of writing, Bitcoin has settled around $71,400.
Analysts at 10x Research believe the recent volatility stems from two opposing forces in the market.
Some traders are concerned that Bitcoin’s recent gains may not be sustainable and are apprehensive about a potential price correction. This is seen in Bitcoin’s failure to rally during U.S. trading hours, which coincides with the launch of new Bitcoin exchange-traded funds (ETFs).
On the other hand, there’s still a strong sense of FOMO driving the market. This suggests that the rally might continue despite the underlying anxieties.
10x Research further highlights a 5% increase in futures open interest over the weekend, suggesting increased leveraged positions with potentially tight stop-loss orders, which can trigger automatic selling when the price falls below a certain level.
Impact Across Exchanges and Altcoins
Bitcoin and Ethereum bore the brunt of the liquidations, with over $106 million and $73 million lost in leveraged positions, respectively. Other cryptocurrencies like Solana (SOL), Dogecoin, and Ordi (ORDI) also saw significant liquidations.
The crypto exchange OKX witnessed the most significant combined long and short liquidations at $152 million, followed by Binance with $128.4 million.
It’s worth noting that short sellers, those betting against Bitcoin’s price, haven’t fared well over the long term either. According to S3 Partners, short sellers incurred losses exceeding $6 billion in their attempts to bet against publicly traded crypto companies over the past year (as of November 2023). This coincides with a significant 130% rise in Bitcoin’s price during the same period.
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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