Bitcoin Price Drops 10% in Leverage Flush
Bitcoin experienced a sudden drop of about 10% earlier today, resulting in a price decrease of 7.4% over the last 24 hours. The price fell from $45,500 to $40,800 in just three hours. Market data reveals that this unexpected change is due to a leverage flush, which eliminated overleveraged positions.
Liquidations and Forced Sales
The liquidations caused by highly leveraged positions can lead to forced sales and further price decreases, creating a cycle of liquidations until a leverage flush occurs. CoinGlass data shows that Bitcoin witnessed $2.7 million of one-hour-long liquidations, $116 million of 4-hour-long liquidations, and $129 million of 24-hour-long liquidations.
Matrixport’s Report and Market Manipulation
Crypto investor Scott Melker highlighted a report published by Matrixport as the trigger for the leverage flush. The report predicts that the US Securities and Exchange Commission (SEC) will reject Bitcoin ETF applications, contradicting the company’s previous suggestion. However, Melker dismissed the report as having little value.
Some market participants accused Matrixport of market manipulation. Crypto influencer Stack Hodler suggested that the sudden change in their stance was engineered to liquidate Bitcoin longs before potential ETF approval.
Hot Take: Leverage Flush Sparks Bitcoin Price Drop
The recent 10% drop in Bitcoin’s price was attributed to a leverage flush, resulting in forced sales and liquidations of highly leveraged positions. This sudden downturn was triggered by a report from Matrixport predicting the rejection of Bitcoin ETF applications by the SEC. While some viewed this as market manipulation, it highlights the vulnerability of overleveraged positions in the crypto market. As an investor, it is crucial to stay informed and cautious of such fluctuations caused by leverage flushes.
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