Traders Lose $1 Billion As Volatility Erupts

Bitcoin (BTC) saw extreme volatility in the past 24 hours, shaking the crypto market. A flash crash triggered over $1 billion in liquidations, marking one of the largest sell-offs since FTX’s 2022 collapse.

Coinglass data reveals nearly $900 million in Bitcoin positions were liquidated as its price plummeted from $100,000 to $90,000 before rebounding to $97,000.

Bitcoin Marks Largest Multi-Year Liquidation Event

This dramatic liquidation cascade affected over 156,000 traders globally, with $816.819 million longs and $279.631 shorts blown out of the water. According to Coinglass, the largest single liquidation, valued at almost $19 million, occurred on the OKX exchange.

Analysts are drawing parallels to the FTX crisis. McKenna, a popular voice in the crypto community, states that this is the most substantial liquidation event since FTX’s insolvency. Several other community members supported this outlook.

“Spot buyers are now stepping in, hovering up the liquidation cascade,” McKenna noted.

Adding to the turmoil, Web3 data analysis tool Lookonchain highlighted that Mt. Gox moved 3,620 BTC valued at $352.69 million to two new wallets.  The transaction happened only hours after the defunct exchange moved $2.43 billion in Bitcoin to unknown wallets after Bitcoin’s price shattered the $100,000 milestone.

Speculation around whether the US government may have offloaded Bitcoin during this period has further fueled market uncertainty.

“Did the US government hit the sell button on the BTC they sent to Coinbase?” one user quipped.

Despite these transactions, several factors drove the massive liquidations. BeInCrypto identified profit-taking, large sell orders at key milestones, and overleveraged positions as significant contributors. Many traders relied on borrowed funds to bet on Bitcoin’s continued rise, leaving them exposed when prices dropped.

Financial analyst Jacob King of WhaleWire criticized overleveraged retail investors for opening long positions at all-time highs.

“This is what happens when retail investors succumb to FOMO and open leveraged long positions at all-time highs, while whales offload their holdings,” King wrote.

Whales Capitalize on the Bitcoin Dip

Despite the chaos, some large investors saw an opportunity. Blockchain analytics firm Lookonchain revealed that a whale purchased 600 BTC, valued at $58.85 million, during the sharp decline. This brought their two-week total accumulation to 1,300 BTC worth $127 million. This opportunistic buying demonstrates the allure of Bitcoin even amid turbulence.

“After BTC dropped from $100,000, a whale seized the opportunity and bought 600 BTC worth $58.85 million! Over the past 2 weeks, this whale has accumulated a total of 1,300 BTC valued at $127 million,” Lookonchain reported.

Despite the liquidation, some analysts view this event as a necessary correction in Bitcoin’s bull market, capable of marking a short-term bottom. Others argue that the long-term fundamentals remain intact, as evidenced by renewed whale activity and steady accumulation.

The broader crypto market echoed Bitcoin’s volatility, with Ethereum and other major coins also experiencing heightened liquidation levels. As traders work around these developments, the focus shifts to Bitcoin’s ability to reclaim critical support levels around $97,000 and sustain its historic rally.

According to BeInCrypto data, Bitcoin was trading for $98,404 as of this writing, representing a 4% drop since Friday’s session opened.