BTC and ETH sold off heavily, causing cryptocurrency traders to face a $1 billion liquidation.

Author: Krisztian Sandor, CoinDesk; Translation: Song Xue, LianGuai

Coinglass data shows that cryptocurrency traders suffered a loss of $1 billion in liquidation in the past 24 hours as the digital asset market experienced one of the most severe sell-offs of the year, with Bitcoin prices falling to a two-month low.

Bitcoin, the largest original cryptocurrency, plummeted 7% to around $26,900 after earlier dropping to nearly $25,000 (the lowest level since June).

CoinGlass shows that approximately $821 million worth of long positions (traders betting on price increases) were liquidated in the process of rushing to exit. Bitcoin (BTC) traders were hit the hardest, suffering $472 million in long liquidations, followed by Ethereum (ETH) with losses of $302 million.

Coinalyze data shows that this is the highest level of BTC liquidations in a single day since June 2022, when the price of major cryptocurrencies plummeted to $17,000.

Liquidation volume in the past 24 hours (Coinglass)

At the time of this liquidation, cryptocurrency prices hit rock bottom during the U.S. afternoon on Thursday, turning this month’s slow downward trend into a massacre, as financial markets were unsettled by forex crashes, concerns about the Chinese economy, and bond yields reaching multi-year highs. Major cryptocurrencies like BTC and ETH saw a drop close to double digits, reaching the lowest levels since early summer.

Liquidation occurs when exchanges close leveraged trading positions due to traders losing part or all of their initial funds or “margin.” If traders fail to meet margin requirements or do not have enough funds to maintain the trade, liquidation occurs. This dynamic can trigger a series of liquidations when asset prices plummet, exacerbating losses and price declines.

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