The total number of positions liquidated has exceeded $1.7 billion as the price of Bitcoin (BTC) dropped to a daily low of $94,150 on Monday. The profit-taking frenzy continued into Tuesday, with BTC still held below the $97,000 level at the time of writing.
This occurred as the cryptocurrency market braces for a volatile week, with several key economic events in the U.S. on the calendar.
Total Crypto Liquidations Exceed $1.7 Billion
According to data from CoinGlass, 583,530 traders were flushed out of the market in the past 24 hours. The total liquidation amount has since exceeded $1.7 billion. Of this, at least $1.552 billion were long positions, while $154.59 million were short positions.
The large liquidations followed the recent correction in Bitcoin. The pioneering cryptocurrency dropped to a daily low of $94,150 on the Binance exchange.
While the liquidation event has left traders and investors stunned, the current market sentiment is a mix of optimism and skepticism. Nevertheless, Unipcs, a prominent user on X, has called for caution.
"... [This has marked] the largest long liquidation event since 2021. Large liquidation events like this almost always mark a Dip. This is not a time to panic sell. Nor is it a time to get too greedy or rush to increase leverage. This may be a good time to start scaling into high-conviction investment opportunities in the spot market, preparing for the next price explosion," the user stated.
Indeed, caution is warranted when considering the expected impact of the U.S. economic data to be released this week. As TinTucBitcoin has reported, the Consumer Price Index (CPI), weekly employment data, and the Producer Price Index (PPI) in the U.S. could influence Bitcoin sentiment this week. These macroeconomic data points will reveal the state or health of the U.S. economy.
However, for some, the large liquidations have provided a "clean slate," wiping out all the leverage ratios of altcoins. This means a significant number of leveraged positions have been forcibly closed due to the sharp market decline.
"All the altcoin leverage ratios have been wiped clean. This is a clean slate," Seth, a crypto analyst, commented.
Leverage ratios are the mechanism by which exchanges ensure that the price of the perpetual futures contract market remains in line with the spot market price. The liquidation of many leveraged positions can lead to extreme volatility and price instability in the market. In many cases, this causes the leverage ratios to revert to a more neutral level.
Analysts believe that such events help to flush out excessive leverage, speculative positions, and weak hands from the market. This paves the way for a healthier and more sustainable price movement in the future. By removing the overly leveraged positions, the market can find a more solid footing for growth without the burden of excessive speculation driving prices.
Data from TinTucBitcoin shows that BTC is trading at $96,682 at the time of writing, down nearly 3% since the Tuesday session opened.
