Crypto liquidations soar to highest since 2021 as bitcoin drops below $100,000
Quick Take
- Bitcoin lost 2% in the past 24 hours to $96,500 at the time of writing, after reaching a low of $93,000 at one stage on Thursday.
- More than $1.1 billion worth of cryptocurrencies have been liquidated in the last 24 hours.
- One analyst told The Block that the recent drop appears to be a “leverage flush” from larger holders.
The price of bitcoin, after surpassing the $100,000 milestone, briefly plunged to a low of around $93,000 on Thursday.
Following the daily low, bitcoin was trading at $96,500 at the time of writing, down 2% over the past 24 hours, according to The Block’s bitcoin price page.
The crypto market experienced over $1.1 billion in liquidations across centralized exchanges in the past 24 hours, marking the largest daily crypto liquidation since December 2021, according to data from Coinglass. About $815 million came from long positions and $280 million from short.
Bitcoin was the leading cryptocurrency in the liquidations, with over $560 million liquidated in the past 24 hours.
Thursday’s bitcoin price drop appears to be a classic case of “leverage flush,” where a sell-off that targets liquidity pockets triggers stop-losses and liquidations at key price levels, said Rachel Lucas, crypto analyst of BTC Markets.
“Market makers and large players often use these conditions to their advantage, first pushing the price above US$100,000, attracting retail enthusiasm, and then reversing it sharply to liquidate leveraged positions on both sides, long and short,” Lucas said.
Crypto liquidations occur when a trader’s positions in the cryptocurrency market are forcibly closed due to significant losses or a lack of sufficient margin to meet the maintenance requirements.
“Retail traders' excessive leverage during bitcoin's all-time high exacerbated this situation,” Lucas also said. “Many succumbed to FOMO (fear of missing out), taking long positions at elevated levels, while larger holders (whales) strategically offloaded their assets.”
Lucas noted that such liquidation events tend to reset the overheated funding rates and reduce leverage in the market, which may lead the market to stabilize after this correction with potential for recovery.
“Interestingly, despite the 15% bitcoin sell-off, other cryptocurrencies have shown relative strength, suggesting broader market resilience,” Lucas said. According to The Block’s crypto price page, ether added 0.77% to $3,837, while Solana gained 5.17% to trade at $238.5. Gains were also seen in Dogecoin, Toncoin, and Sui.
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