The cryptocurrency market experienced a sharp downturn, with over $217 million in positions liquidated within 24 hours. Traders were caught off guard as Bitcoin and Ethereum saw significant losses, driven by high leverage and rapid price swings. This event highlights the volatility inherent in digital assets.
In a stunning turn, the crypto market saw approximately $217 million liquidated in just 24 hours, primarily affecting long positions worth $167 million and short positions at $50 million. Bitcoin accounted for roughly $33 million in combined liquidations, including $21.5 million in longs and $11.6 million in shorts, as its price briefly dropped below a key support level before a slight recovery. Ethereum bore the brunt with nearly $65 million wiped out, comprising $36.7 million in longs and $28.7 million in shorts, amid falling prices.
The cascade began with excessive leverage, where traders bet heavily on an upside rebound, ignoring risk limits in an atmosphere of market overconfidence. Even minor 2-3% price moves in Bitcoin triggered automated margin calls, leading to a domino effect of forced sell-offs. Smaller coins like Solana and XRP also faced pressure, amplifying the market's volatility.
Traders are now watching critical levels: Bitcoin's support zone between $110,000 and $112,000 for stability, and Ethereum holding above $3,400 to prevent deeper corrections. Declining open interest on exchanges may signal de-risking, while macroeconomic factors such as U.S. inflation and interest rates continue to sway risk assets like crypto.
Lessons from this wipeout include controlling risk exposure, setting stop-loss orders, diversifying holdings, monitoring liquidation data, open interest, and funding rates, and staying vigilant in the 24/7 trading environment.