Bitcoin Plunge Triggers Massive Liquidations in Crypto Market
Bitcoin’s sudden drop on Thursday caught traders off guard, resulting in significant liquidations in the crypto market. The token’s plunge caused nearly $300 million worth of BTC-specific liquidations within 24 hours, and over $800 million worth of liquidations across the broader cryptocurrency market.
The Unexpected Plunge
Early Thursday morning, Bitcoin reached a new all-time high of nearly $74,000. However, the release of a report by the U.S. Labor Department indicating that inflation has not yet subsided caused a downward spiral for Bitcoin that it has struggled to recover from.
Bitcoin dropped as low as $65,848 on Friday morning, representing an 8% decrease from its Thursday highs. This dip took many traders by surprise, as they had bet hundreds of millions of dollars on the coin’s continued upward price movement due to its recent record-breaking rally.
Liquidations in the Crypto Market
- Over $200 million worth of BTC long positions have been liquidated in the last 24 hours.
- Over $70 million worth of BTC short positions have also been liquidated in the same period.
- Bitcoin-related liquidations accounted for over a third of all such transactions in the crypto market.
This significant number of liquidations highlights how heavily traders were positioned for Bitcoin’s price to continue rising.
Impact on Other Cryptocurrencies
Ethereum experienced an 8% drop following the news about inflation, with its price falling to $3,701. Similar to Bitcoin, more than $100 million worth of ETH long positions were liquidated, along with over $30 million worth of short positions.
Other cryptocurrencies also felt the impact of the sudden price dip:
- Solana saw over $40 million worth of liquidations.
- Dogecoin experienced approximately $18 million worth of liquidations.
Interestingly, Solana was an exception to the trend, as both long and short liquidations were almost equally split at around $20 million each.
Hot Take: Unpredictable Market Movements
The recent plunge in Bitcoin’s price serves as a reminder of the unpredictable nature of the crypto market. Traders who had bet on Bitcoin’s continued rise faced significant losses due to the sudden drop triggered by inflation concerns.
It is crucial for crypto traders to stay informed about market trends and be prepared for unexpected price movements. Risk management strategies, such as setting stop-loss orders and diversifying portfolios, can help mitigate potential losses during volatile periods.
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