Bitcoin Drops Below $59K, Resulting in $230M in Liquidations for Bullish Traders
Bitcoin Drops Below– Bitcoin (BTC) took a significant hit on Thursday, dropping below $59,000 for the first time since late April. This drop was largely driven by concerns over potential selling pressure from the now-defunct Mt. Gox exchange and possible sales from miners.
In July 2024, Mt. Gox is set to start distributing assets stolen from clients during a 2014 hack. After years of delays, these repayments will be made in Bitcoin and Bitcoin Cash (BCH), potentially flooding the market and driving prices down further.
According to CoinGecko, Bitcoin has lost 3.3% in the last 24 hours, with the sell-off kicking off shortly after Tokyo’s stock market opened. The ripple effect of Bitcoin’s weakness has hit other major cryptocurrencies as well. Ether (ETH) is down 4%, and Solana (SOL) and Dogecoin (DOGE) have plunged by up to 8%.
Market Turmoil: Bitcoin Slips Under $59K, Causing $230M in Liquidations
The CoinDesk 20 (CD20), which tracks the largest and most liquid tokens, has dropped 4.8% in the past 24 hours. This broad decline has been particularly tough on futures traders who were betting on higher prices, with losses exceeding $230 million, according to CoinGlass.
Futures tied to Bitcoin (BTC) and Ether (ETH) each saw over $60 million in long liquidations, while those tracking Dogecoin (DOGE), Solana (SOL), XRP, and Pepe Coin (PEPE) recorded at least $4 million in losses each. For traders holding long positions, these liquidations are the highest since late June.
Among exchanges, Binance saw the most action, with over $110 million in liquidations. Liquidations happen when an exchange forcibly closes a trader’s leveraged position because the trader can’t meet the margin requirements—essentially, they don’t have enough funds to keep the trade open.
This kind of data is useful for traders because it shows that leverage is being squeezed out of popular futures products, which can be a short-term signal that price volatility might decrease.
FAQs
Why did Bitcoin drop below $59K?
Bitcoin’s drop below $59K was influenced by fears of looming selling pressure from the now-defunct exchange Mt. Gox, which is set to start distributing assets in July 2024. Additionally, potential sales by miners added to the downward pressure on Bitcoin’s price.
What are liquidations in the crypto market?
Liquidations occur when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This happens when the trader cannot meet the margin requirements to keep the trade open, resulting in the position being closed out to prevent further losses.
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