Total liquidations exceeded $1.7 billion as Bitcoin (BTC) price dropped to establish an intra-day low of $94,150 on Monday. The profit-booking appetite extended to Tuesday, with BTC still stunted below the $97,000 threshold as of this writing.
It comes as crypto markets brace for a wild week, with multiple key US economic events on the calendar.
Total Crypto Liquidations Exceed $1.7 Billion
According to data on Coinglass, 583,530 traders were blown out of the water in the last 24 hours. Total liquidations exceeded $1.7 billion in the aftermath. Of these, at least $1.552 billion had been taken long positions, while $154.59 million were short.
The massive liquidations followed Bitcoin’s recent correction. The pioneer cryptocurrency dropped to an intra-day low of $94,150 on Binance Exchange.
While the liquidation event shocked traders and investors, the market is equally optimistic and skeptical. Nevertheless, Unipcs, a popular user on X, calls for caution.
“… [It marked] the largest long liquidation event since 2021. Massive liquidation events like this almost always mark a bottom. This is not the time to panic sell. It is also not the time to get too greedy or hasty piling on the leverage. It is probably a good time to start scaling into high conviction plays on spot in preparation for the next aggressive upward move,” the user said.
Indeed, caution is warranted considering the expected impact of US economic data releases this week. As BeInCrypto reported, the US Consumer Price Index (CPI), weekly jobs data, and the Producer Price Index (PPI) could influence Bitcoin sentiment this week. These US macroeconomic data will reveal the state or health of the US economy.
To some, however, the massive liquidations provided a “healthy flush,” wiping clean all altcoins’ funding rates. This means that a significant number of leveraged positions were forcefully closed due to the sharp decline of the market.
“All altcoins funding rate got wiped clean. This was a healthy flush,” Seth, a crypto analyst, quipped.
The funding rate is the mechanism by which exchanges ensure that the perpetual futures market price stays in line with the spot market price. The liquidation of many leveraged positions can lead to extreme volatility and price dislocations in the market. In many instances, this causes the funding rate to reset back to neutral levels.
Analysts believe that such events help shake 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 clearing out overleveraged positions, the market can potentially find a more stable ground for growth without the burden of excessive speculation driving prices.
BeInCrypto data shows that BTC was trading for $96,682 as of this writing, a drop of almost 3% since the Tuesday session opened.
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