The cryptocurrency market has been hit hard, with data revealing that the derivatives market suffered liquidations exceeding $1 billion in the past day following Bitcoin’s dramatic drop to $52,000.
Bitcoin investors faced a harsh surprise to start the week, as the cryptocurrency plummeted by over 15%, bringing its price down to $51,500. This sharp decline is part of a larger downward trend observed since the final days of July. On July 29th, Bitcoin was trading around $70,000, making the recent drop a staggering 26% within just a week. This current price level brings Bitcoin back to where it was before the significant rally in late February, which had led to a new all-time high.
While Bitcoin has taken a substantial hit, the situation is even worse for other major cryptocurrencies. Ethereum, Binance Coin (BNB), and Solana have all experienced larger losses of 23%, 19%, and 21%, respectively. As the entire sector’s prices nosedived, it is no surprise that long investors have faced severe repercussions on the derivatives market.
The past 24 hours have brought chaos to the derivatives market, as evidenced by data from CoinGlass, showing a staggering $1.1 billion in cryptocurrency derivatives contracts being liquidated. Liquidation occurs when a contract accumulates significant losses, prompting the platform to forcibly close it. Approximately 85% of these liquidations involved long holders, a clear consequence of the widespread market crash.
Interestingly, despite the steep declines, $173 million in short contracts were also liquidated, indicating that many investors placed their bearish bets too late. In terms of individual cryptocurrencies, Bitcoin and Ethereum have nearly equally contributed to the liquidation event, with $367 million and $350 million likened, respectively.
This pattern is unusual, as Bitcoin typically leads by a wider margin. The high liquidation figures for Ethereum could be attributed to the recent launch of spot exchange-traded funds (ETFs), which have shifted more investor attention toward the second-largest cryptocurrency by market cap.