After a stunning morning for the crypto market that saw Bitcoin rocket 11% in a matter of hours before quickly plunging, many traders are no longer smiling, with Wednesday's rollercoaster leading to a colossal $640 million worth of crypto positions liquidations within mere hours.
In the last 12 hours alone, about $309 million worth of crypto short positions—as well as about $333 million worth of long positions—have been liquidated, according to data compiled by CoinGlass. The majority of those liquidations, about $424 million worth, have come within the last four hours alone.
Overall, in the last 24 hours, about $700 million worth of crypto positions have been liquidated. Some $262 million of those came from Bitcoin alone, with Ethereum next up at $109 million.
According to Greg Magadini, director of derivatives at blockchain analytics firm Amberdata, such a high sum of liquidations in such a condensed period is to be expected when an asset like Bitcoin experiences as brief and extreme of a rally as it did Wednesday.
Bitcoin Is 12% Below Its All-Time High 52 Days From Halving
All eyes were on the price of Bitcoin on Wednesday as the number-one cryptocurrency by market capitalization topped $63,636 before tumbling to $59,557. Even so, two months before the halving, Bitcoin is less than 12% below its all-time high of $69,044 from November 10, 2021. The distance Bitcoin needs to close before matching its all-time high continues to fluctuate; the last time Bitcoin ascended above $63,000 was April 12, 2021, according to CoinGecko. Image: CoinGecko Bitcoin’s rise to $60,00...
“There’s FOMO, and things get so euphoric that the second prices start to tick down,” Magadini told Decrypt. “It creates a cascading effect.”
Once prices begin to fall during an impressive price sprint, Magadini explained, the most highly leveraged traders of an asset are forced to liquidate, bringing down an asset’s price. That then forces the next level of leveraged traders to liquidate, dragging prices lower, and so on and so forth. This phenomenon is commonly referred to in finance as a “blow-off top.”
“And so it snowballs on the way down,” he added.
Coinbase Is Showing Zero Balance for Some Users, Says It's Investigating
Some users of cryptocurrency exchange Coinbase are reporting seeing a zeroed-out balance for their crypto holdings, based on social media reports Wednesday. The exchange updated its status page to note that the issue is being addressed and that customers' funds are secure. "We are aware that some users may see a zero balance across their Coinbase accounts and may experience errors in buying or selling. Our team is investigating this issue and will provide an update shortly. Your assets are safe,...
Perhaps surprisingly, Bitcoin only fell a few points before beginning to recover on Wednesday afternoon.
After climbing above $63,600 just after 12pm ET, the world’s top cryptocurrency began shedding value, falling near $60,000 within an hour. The token has since recovered slightly, though, to $61,000 at writing, according to CoinGecko. BTC is still up a rare 7% in the last 24 hours.
Edited by Andrew Hayward
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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
