Bitcoin’s Flash Crash Triggers Over $1 Billion in Liquidations After Reaching a New ATH
After peaking around $69,200, a swift downturn to $59,000, driven by bearish pressure, resulted in over $1 billion in liquidations, predominantly from traders over-leveraging on the upward momentum. Bitcoin has since partially recovered, now trading at $66,226
In an astonishing turn of events this week, leverage traders experienced over $1 billion in losses following Bitcoin’s dramatic crash from its fleeting all-time high above $69,000. This incident marks a significant moment in the crypto market, illustrating the high-risk environment that traders navigate.
On March 5, Bitcoin momentarily achieved a new all-time high, surpassing $69,200, only to undergo a precipitous drop, falling below $60,000 at one point. This 14% crash not only erased recent gains but also led to a massive wave of liquidations across the market.
Open interest in Bitcoin, along with Ethereum (ETH) and Solana (SOL), witnessed a sharp decline as per an analysis by on-chain analytics provider Santiment. Specifically, Bitcoin’s open interest plummeted by $1.46 billion, a 12% drop, highlighting the rapid exit of traders from the market.
This massive sell-off was triggered by a combination of long positions being liquidated and short positions closing as Bitcoin momentarily brushed against its peak. The market’s swift response to Bitcoin’s price movement resulted in approximately 312,500 traders being liquidated, with total liquidations amounting to $1.13 billion over a 24-hour period.
Interestingly, this recent upheaval in the Bitcoin market follows a period of bullish momentum, with the cryptocurrency breaking its previous all-time high after an 847-day wait. However, the joy was short-lived as selling pressure on crypto exchanges quickly reversed the gains, showcasing the inherent volatility of the crypto sector.
The fallout from this price drop was not limited to Bitcoin. Other major cryptocurrencies, including Ethereum and Solana, also suffered losses, while meme coins like Dogecoin and Shiba Inu faced declines of over 20%. This market-wide correction underscores the interconnected nature of the cryptocurrency ecosystem and the domino effect that significant price movements can have across different assets.
Derivatives trading, a common practice among crypto traders seeking leverage, was hit hard by this event. According to Coinglass, the majority of the liquidated positions were long, totaling $879.68 million, while short positions accounted for $254.80 million of the losses.
Crypto market veterans have likened the recent events to some of the most severe market downturns, reminding traders and investors of the high-risk nature of cryptocurrency trading. Liquidations, while common in the crypto world, can significantly amplify market volatility and lead to steep price declines, as seen in this latest Bitcoin crash.
