Bitcoin reached $95,000 following Trump’s announcement about a strategic reserve in cryptocurrency before experiencing a significant correction.
The filling of the CME gap at $82,500 resulted in $900 million in liquidations on futures within 24 hours.
Crypto market cap gained $370 billion on March 2nd, only to drop by $360 billion on March 3rd, marking extreme volatility.
Soaring fueled by Trump’s announcement
Bitcoin experienced a rapid ascent to $95,000 driven by Donald Trump’s announcement regarding the creation of a strategic reserve in cryptocurrency. This initiative, revealed on Sunday evening, includes not only Bitcoin but also Ethereum (ETH), XRP, Solana (SOL), Cardano (ADA), and other valuable cryptocurrencies. The announcement triggered a wave of institutional buying, propelling BTC to new heights.
Return to equilibrium with the filling of the CME gap
The Bitcoin futures market on CME opened at $95,300 on Monday, well above the previous Friday’s closing price of $84,500. This type of gap—a price difference caused by the closure of the futures market over the weekend while the spot market remains active—is often filled in the following days. This is exactly what happened on Tuesday, with BTC returning to $82,500, confirming a correction after the price surge.
Bloodbath in the derivatives market
The filling of this gap resulted in a massive liquidation of long positions on Bitcoin futures. Within 24 hours, nearly $900 million in bullish positions were liquidated, bringing the cumulative losses over three days to over $1.5 billion, without accounting for all the data.
In detail, $400 million in long positions on Bitcoin were eliminated, with a concentration of liquidations during the late US session and the opening of Asian markets. This phenomenon can be explained by the excessive leverage used by some traders, who were forced to close their positions due to an inability to meet margin requirements.
March 2nd represented a historical record in market cap gain for the crypto market, with $370 billion added to its total. Ironically, March 3rd represents the second-largest drop in crypto market history in terms of market capitalization, erasing over $360 billion in less than 24 hours.
An indicator of market overheating?
Chain liquidations often signal a correction phase or even a trend reversal. When an asset becomes too overbought after a surge, a significant liquidation can suggest that the market is ready to take a breath. However, this does not necessarily mean a sharp reversal: consolidation can precede a new bullish impulse.
Another gap below $80,000 in sight?
While the CME futures gap above $84,000 has been filled, another gap that appeared in November after Trump’s election remains under scrutiny. Located below $80,000, this gap emerged after a price jump to $81,000 on the day following Trump’s victory.
This level could now become a technical target if the correction continues, especially since Bitcoin is still operating in a volatile context, with institutional euphoria and forced liquidations in the derivatives market.
