Crypto Traders Count $1 Billion in Losses as Bitcoin and Ether Face Steep Decline. The world of cryptocurrency experienced a significant downturn on the late hours of Thursday, witnessing bitcoin (BTC) plummet to as low as $25,000 on the Binance crypto exchange.
Within the past 24 hours, cryptocurrency traders endured losses amounting to $1 billion due to liquidations, as per data provided by Coinglass. This event marked one of the most substantial sell-offs of the year for digital asset markets, leading to a two-month low in the price of bitcoin.
Bitcoin, the pioneer and largest cryptocurrency, suffered a 7% drop, bringing it to approximately $26,900. Earlier in the day, it had even dipped close to $25,000, a level not seen since June.
The exit rush resulted in the liquidation of around $821 million worth of long positions—trades made in anticipation of price increases—as indicated by CoinGlass. The impact was felt most by bitcoin (BTC) traders, who faced $472 million in long liquidations, followed by ether (ETH) traders at $302 million.
According to data from Coinalyze, this marked the most significant volume of BTC liquidations in a single day since June 2022, around the time when the value of the leading cryptocurrency plummeted to $17,000.
The liquidation events unfolded as cryptocurrency prices experienced a sharp decline during the afternoon hours in the United States. This abrupt downturn transformed the month’s gradual downtrend into a situation of extreme losses.
Contributing factors include uncertainties in financial markets, deteriorating foreign currencies, concerns about the Chinese economy, and bond yields soaring to multi-year highs. Major cryptocurrencies like BTC and ETH faced nearly double-digit percentage losses, reaching their lowest points since early summer.
Liquidations occur when leveraged trading positions on exchanges are closed due to either partial or complete loss of the trader’s initial funds or “margin.” This happens when a trader fails to meet the required margin or lacks sufficient funds to maintain the trade.
When asset prices experience a sharp drop, this phenomenon can trigger a chain reaction of liquidations, exacerbating the overall losses and causing further declines in prices.
— CoinGlass (@coinglass_com) August 18, 2023
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