The sharp downturn in crypto prices on Tuesday led to the most substantial daily liquidation of leveraged long positions since August, as per data from CoinGlass.
Crypto traders faced the most significant wipe-out of leveraged long positions in three months as the rally in digital asset prices, driven by ETFs, abruptly reversed course.
A widespread decline in the market triggered over $307 million in liquidations of leveraged long positions within the last 24 hours, according to CoinGlass data. This marked the highest volume of liquidated long positions in a single day since August 17, when Bitcoin (BTC) experienced a sudden drop from over $28,000 to around $25,000 in a brief span.
The recent wipeout occurred as BTC declined by 4% to $35,000, despite an overall favorable environment for risk assets following a less heated October inflation report, which propelled stocks significantly higher while pushing bond yields lower. This decline affected the entire crypto spectrum, including Ether (ETH), which fell by 6% to dip below the $2,000 mark.
Today’s market action is a stark departure from the trend observed in recent weeks, characterized by “short squeezes” due to surging asset prices that led to the liquidation of leveraged positions betting on price declines.
Liquidations take place when an exchange is compelled to close a leveraged trading position because the trader’s margin or initial investment faces either partial or total loss. These cascading liquidations often amplify price volatility as traders rush to close their positions, effectively reducing excessive leverage within the market.
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