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Bitcoin Experiences a Sharp Decline Triggering Significant Liquidations Across the Crypto Market
Bitcoin, the leading cryptocurrency, faced a tumultuous Thursday as it unexpectedly plummeted from its recent high of nearly $74,000 to a low of $65,848 within a day. This sudden drop caught many traders off guard, resulting in approximately $300 million in Bitcoin-specific liquidations and over $800 million in liquidations across the broader crypto market. The trigger for this downward trajectory was attributed to a report from the U.S. Labor Department revealing persistent inflationary pressures, causing uncertainty among investors.
Following its decline, Bitcoin has since partially recovered to $67,860, marking an 8% decrease from its peak on Thursday. The sharp downturn in Bitcoin’s price was unforeseen by traders who had bet substantial amounts, assuming the cryptocurrency would continue its upward trajectory amid its recent record-breaking rally.
Recent data from CoinGlass indicates that over $200 million in long positions of Bitcoin were liquidated within 24 hours, amidst the prevailing market conditions. Additionally, more than $70 million in short positions of the cryptocurrency were also liquidated during the same period.
While Bitcoin accounted for a significant portion of the liquidations in the crypto market, other digital assets experienced similar trends. Ethereum, the second-largest cryptocurrency, saw an 8% decline to $3,701 following the negative inflation news. Consequently, over $100 million in long positions and $30 million in short positions of Ethereum were liquidated.
Furthermore, other cryptocurrencies such as Solana and Dogecoin witnessed substantial liquidations amounting to over $40 million and $18 million, respectively. Interestingly, Solana stood out as it had an almost equal distribution of long and short liquidations worth approximately $20 million each within the last 24 hours.
Despite the majority of liquidations emanating from long positions across various digital assets, the market volatility demonstrated the vulnerability of cryptocurrencies to external factors such as economic indicators. The events of Thursday serve as a stark reminder of the inherent risks associated with investing in volatile assets like Bitcoin and other cryptocurrencies.
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