Second-Largest Bitcoin (BTC) Liquidation Event Rocks Crypto

Bitcoin suffered a major price drop this week, triggering a record-breaking liquidation event in the cryptocurrency market.

Man standng next to the price chart of Bitcoin, seeing them tumble into the ground.
Created by Kornelija Poderskytė from DailyCoin
  • Bitcoin’s price has plunged, triggering a record-breaking sell-off.
  • With steeper losses in altcoins, Bitcoin’s dominance is facing a test.
  • The current decline in Bitcoin’s value could indicate future strength.

It’s been a white-knuckle week in the world of cryptocurrency. Bitcoin, the undisputed king of digital coins, took a nasty tumble, sending shockwaves through the entire market. This freefall wasn’t just about the price dropping; it triggered a liquidation event of epic proportions, forcing investors to shed their holdings in a desperate scramble to avoid even steeper losses.

CoinGlass data reveals a bloodbath, with over $418 million in Bitcoin positions liquidated during the week. This represents a hefty 31.5% of all liquidations within that timeframe, a seemingly staggering sum. 

$418M Bitcoin Liquidated: Is It Worse Than It Looks?

Bitcoin’s heavyweight status in the crypto market adds another layer to the story. With a commanding 54.85% share of the total cryptocurrency market capitalization, Bitcoin naturally attracts a larger pool of leveraged positions than other coins. 

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This dominance translates to a potentially higher total dollar value of liquidated positions for Bitcoin, despite the seemingly smaller percentage of overall market liquidations. Despite the high liquidation numbers, the data suggests that Bitcoin actually fared better than many other cryptocurrencies during the price decline. 

While Bitcoin saw $418 million liquidated, Ethereum (ETH), the second-largest cryptocurrency by market cap (sitting at 17.7%), had a staggering $321.4 million liquidated in the same period. This translates to roughly 24% of the total market liquidations, highlighting the potential for even steeper losses for altcoins during a market downturn. 

Bitcoin Down, But Not Out

Looking deeper, CoinGlass data for this week has suggested that this Bitcoin liquidation event was the second-largest in its history, surpassed only by the massive liquidations triggered by the collapse of cryptocurrency exchange FTX in 2022.

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Here, a crucial difference emerges. While this current event liquidated roughly $418 million in Bitcoin, the FTX debacle resulted in a staggering $560 million worth of Bitcoin positions being forced out. However, the impact on price was far more severe during the FTX collapse. 

After the carnage subsided, Bitcoin’s price plummeted to a low of $15,470 per coin, a significantly steeper decline compared to the current price, which sits at around $56,530—only 23% below its all-time highs. This suggests Bitcoin’s resilience may be improving, though the market’s inherent volatility and potential for significant losses remain concerns.

On the Flipside

  • While Bitcoin may have performed better than some altcoins, a $418 million liquidation event is still significant and indicates a troubled market.
  • It’s too early to say if this is a temporary setback or a sign of a more bearish trend for Bitcoin.
  • Market sentiment can shift quickly. Positive news or events may trigger price surges, while negative factors could deepen losses.

Why This Matters

This large-scale Bitcoin liquidation event, while the second biggest ever, appears less damaging than the FTX collapse despite similar liquidation amounts. This could indicate a growing resilience in Bitcoin, but the overall crypto market volatility and potential for altcoin losses during downturns remain key takeaways for investors.

If you found this article interesting, you’ll probably like this piece on Bitcoin ETFs seeing significant inflows amidst BTC’s resurgence above $56K:
Bitcoin ETFs See $143.1M Inflows as BTC Regains $56K

For more insights into the recent downturn in Bitcoin’s price below $55K and its impact on the broader crypto market, check out this article:
Bitcoin’s $55K Misery Piles onto Altcoins as Losses Drag

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.