Bitcoin Plummets Beneath $100,000: Crypto Liquidations Reach 2021 Peak

Key Points

• The crypto market witnessed liquidations exceeding $875 million due to a drop in Bitcoin's value.
• Bitcoin long liquidations reached a record high of $416 million.

Cryptocurrency Liquidations Surge

The cryptocurrency market recently saw a significant spike in liquidations, with over $875 million in leveraged long and short positions extinguished within a single day. This marks the highest liquidation volume since 2021.

Data from Coinglass reveals that long liquidations totaled $702 million, while short liquidations amounted to $173 million, affecting more than 157,000 traders.

Bitcoin Long Liquidations

Traders expecting a continued rise in Bitcoin's value [BTC] incurred the most significant losses. Long BTC liquidations reached $416 million. These positions were closed following a surge in volatility, causing the price to drop from over $100,000 to $92,000 in less than four hours.

Altcoin Impact

Altcoins also faced increased volatility. The price of Ethereum [ETH] fluctuated between $3,600 and $3,900, leading to $85 million in liquidations. XRP and Dogecoin نیز شاهد liquidations قابل توجهی بودند.

Overleveraged Market and Liquidations

The sudden increase in liquidations and volatility may be attributed to a forced correction stemming from an overleveraged market.

Bitcoin funding rates soared to a multi-month high, indicating an increasing dominance of long positions. However, when funding rates reach extreme levels, it often triggers a sharp reversal. This resulted in a long squeeze, forcing sell-offs and driving funding rates down.

Outlook

Despite the recent correction, Bitcoin's Market Value to Realized Value (MVRV) ratio suggests potential for further gains. Currently at 2.5, the ratio indicates that the asset is still fairly priced. A surge in the MVRV ratio beyond 3.5 would signal an overvalued condition for Bitcoin. Traders should monitor this metric for any further increase into overvalued territory.