Yesterday’s Bitcoin Selloff Saw Record $1.6B In Liquidations

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Bitcoin price fell over 10% yesterday and the price has been moving since then. The sell-off was in response to a number of factors including the introduction of a new ban in India, a CFTC investigation into Binance, and a debate over what is viewed as a whale moving a billion BTC.

During the correction, the second-highest record ever was set for the largest amount of money liquidated in long positions. Interestingly, the last major correction was much deeper, but similar liquidations were made. Here’s what this means for market sentiment and how it could affect Bitcoin price action in the days to come.

The second highest total liquidation ever occurred during yesterday’s bloodbath Source: BTCUSD on TradingView.com

Monday’s Bitcoin carnage leads to the second largest purge of all time

Aside from the outbreak of the pandemic, Bitcoin price was immune to negative news for most of 2020 and continued to rise despite all the odds.

The asset’s perfect storm macro environment has put it in the financial industry spotlight, leading it to price over $ 60,000 per coin above this weekend’s high.

Related reading | Bitcoin could close March with the first quarterly bear signal

Whether the tech is overheating, a series of bad news, or the fact that the traders were so grossly overfunded, a sell-off cut the price per BTC by 10% from late Sunday evening through Monday afternoon.

Sales continue despite the bulls showing signs of support in building up. During the madness, margin longs of $ 1.6 billion were liquidated, according to Arcane Research.

More than $ 1.6 billion in over-leveraged traders were liquidated on Monday Source: Arkane Research

Why did the correction wipe out so many cryptocurrency traders?

Bitcoin is in a bull market and when the trading range breaks out cleanly the asset moves at the rate of tens of thousands per month.

The trend was “only up” which resulted in very few pullbacks other than this last and two other sizeable corrections. According to Arcane Research, the largest value ever recorded was just a few million higher than the most recent crash, although it had declined significantly less over the same period.

Related reading | The data shows that bitcoin peaks last around 40 days: when to sell your coins

Obviously the mood is overly bullish and that has made some bulls too eager to position themselves for the next move up. Many in Bitcoin could also make huge profits now and be much more willing to play at the current level than they were before.

Whatever the reason, traders have been targeted and could act as a floodgate for liquidity until leverage in the market diminishes and prices can naturally rise again.

Featured image from deposit photos, charts from TradingView.com