A brief episode of volatility in the cryptocurrency markets has led to significant consequences, with $138 million in liquidations on leveraged positions in the last 24 hours. This situation was primarily triggered by a notable drop in the price of Bitcoin, which fell below the $41,000 threshold.
Massive liquidations for a slight movement
Following this movement of less than 3%, data from Coinglass reveals that the majority of liquidations were on long positions, resulting in a loss of over $120 million. Short positions, on the other hand, accounted for approximately $18 million of the total liquidations.
Indeed, Bitcoin still experienced a significant price drop, losing over 2.5% and currently trading around $40,700. This price decline has contributed to the massive liquidations observed, exacerbating the previously subdued market volatility.
Market context and perspectives
Since the approval of several Bitcoin Spot ETFs by the SEC on January 10, Bitcoin has seen its value decrease by over 7%. Despite an initial rally, the price quickly dropped, leading to concerns and predictions of further decline by renowned analysts. For example, Arthur Hayes, co-founder of BitMEX, expressed his fear of a drop below $40,000 and took measures to hedge against this risk.
The annualized volatility of Bitcoin has also increased, rising from around 46% to over 52%. This increased volatility has contributed to the liquidations, particularly those of long positions on Bitcoin.