Bitcoin Flash Crash Triggers Mass Liquidations, Costing Traders $220 Million

Bitcoin's market sentiment turned bearish this week after a flash crash pushed prices below $69,000. The downturn triggered liquidations of over 81,000 crypto traders, resulting in losses exceeding $220 million. Long traders were disproportionately affected, accounting for 70% of liquidations. Bitcoin, Ethereum, and Dogecoin faced the highest liquidation volumes, primarily from long positions. Despite some recovery, Bitcoin remains below $69,500 resistance, indicating ongoing selling pressure.

Bitcoin Flash Crash Triggers Mass Liquidations, Costing Traders $220 Million

Introduction

The cryptocurrency market witnessed a turbulent start to the week as a sharp price drop sent Bitcoin below the $69,000 mark once again. While the largest cryptocurrency has since recovered somewhat, the damage has been significant, with tens of thousands of traders forced out of their leveraged positions.

Mass Liquidations

The Bitcoin flash crash pushed the price to a support level just above $68,800, triggering a wave of liquidations. According to data from Coinglass, over 81,400 crypto traders lost their leveraged positions in the aftermath of the crash. These liquidations resulted in a staggering loss of over $223 million.

The largest single liquidation occurred on the OKX exchange, where a trader lost $7 million on their ETH-USD-SWAP pair position. Analysis of the liquidations revealed that the majority, approximately 70.01%, were long positions. This indicates that traders who had bet on Bitcoin's continued rise faced significant losses.

Exchange Liquidation Volume

OKX exchange accounted for the highest liquidation volume, representing 46.87%, or $104.61 million, of all liquidations. Binance came in second with 38.72%, or $86.41 million, followed by Bybit with 8.4%, or $18.75 million.

Asset-Specific Liquidations

Bitcoin and Ethereum unsurprisingly accounted for the largest liquidation volumes, with $36.1 million and $28.98 million lost, respectively. Meme coins, such as Dogecoin and PEPE, also faced significant liquidations.

Dogecoin's liquidation volume reached $10.4 million for the 24-hour period, surpassing Solana's $8.3 million. PEPE's liquidation volumes spiked to $7.1 million.

Long Traders Suffer Losses

Long traders, who had bet on Bitcoin's continued surge, suffered disproportionately from the liquidations. Coinglass data shows that in the last 12 hours, long traders accounted for 85.64% of liquidations. This trend continued in the 4-hour and 1-hour timeframes, where they accounted for 6.182% and 72.62%, respectively.

Bitcoin Price Struggles

Despite the recovery from the flash crash, Bitcoin bulls continue to face challenges. The price has been struggling to break through resistance at $69,500. At the time of writing, Bitcoin is trading at $69,450, representing a 1.1% decline in the last 24 hours according to Coinmarketcap.

Conclusion

The Bitcoin flash crash has sent shockwaves through the crypto market, resulting in mass liquidations and significant losses for traders. The high number of long traders caught out highlights the risks associated with leverage and the importance of prudent risk management. As the market recovers, it remains to be seen whether the confidence of bulls has been shaken or if they will continue to push for new highs.