Cryptocurrency Longs Take a Beating as Bitcoin Plunges to $34,000
Today, data reveals that the cryptocurrency longs have suffered significant losses due to Bitcoin’s drop towards $34,000.
Cryptocurrency Futures Market Experiences $137 Million in Liquidations
A substantial number of liquidations have occurred in the cryptocurrency futures market over the past day, according to data from CoinGlass. “Liquidation” refers to the forced closure of a futures contract by the derivative contract when losses reach a certain percentage of the initial collateral.
During volatile periods, traders’ bets are prone to failure, resulting in market-wide liquidations. In the last day alone, approximately $137 million worth of liquidations have been recorded in the cryptocurrency futures market. Out of these, around $113 million were long positions.
The Impact of Long Squeeze on Bitcoin
More than 82% of the liquidations involved long holders, which aligns with the price action as Bitcoin’s plunge triggered most of these liquidations. This large-scale event is commonly referred to as a “squeeze,” and since longs were on the losing side, it is classified as a “long squeeze.”
Bitcoin-Related Contracts Contribute Most to Liquidation
Bitcoin saw $40 million in futures liquidations, while Ethereum had around $21 million. Among altcoins, Solana (SOL) experienced the highest liquidations due to its recent surge in popularity.
Volatility and Speculation in Cryptocurrency Sector
Mass liquidation events like today’s are not uncommon in the cryptocurrency sector due to high levels of leverage and regular price volatility. Despite this squeeze, speculators remain active as Bitcoin’s open interest on the futures market remains high, suggesting the potential for further volatility and liquidations in the near future.
Bitcoin Price and Current Trading Level
After a drop of over 3%, Bitcoin is currently trading around the $34,200 level.
Hot Take: Cryptocurrency Longs Face Heavy Losses Amidst Bitcoin Plunge
Data indicates that cryptocurrency longs have suffered significant losses as Bitcoin’s price plunges towards $34,000. The cryptocurrency futures market has experienced liquidations totaling $137 million in the past day, with long positions accounting for more than 82% of these liquidations. This “long squeeze” has primarily affected Bitcoin-related contracts, contributing to the overall market volatility. Despite this event, speculators remain active in the sector, suggesting the potential for further volatility and liquidation squeezes in the near future. Currently, Bitcoin is trading around $34,200 after a drop of over 3%.
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