Bitcoin has pulled back below $43,000 (£33,870), a capitulation of over 5% in the past 24 hours. The retrace comes after the digital asset broke through a year-to-date high of over $45,800 on Tuesday.
According to Coingecko data, the largest digital asset by market capitalization has shed all gains made earlier in the week and is now changing hands for $42,887.
The recent decline in prices has prompted a significant liquidation of long positions on cryptocurrency exchanges. The volatility has led to the liquidation of more than $169m in bitcoin positions, with the majority, around $137m, consisting of long positions.
Read more: Crypto live prices
According to CoinGlass data, the overall crypto market witnessed the liquidation of over $601m in long positions in the past 24 hours. This contributed to a total of $704m in total liquidations across major cryptocurrency exchanges.
Bitcoin USD (BTC-US)
According to Coinglass, within the last 24 hours 213,999 traders experienced liquidation. OKX, Binance and Huobi were the cryptocurrency exchanges that experienced the most liquidations.
Bitcoin liquidations rise
Liquidations tend to occur during volatile price swings such as unexpected downturns. When prices fall sharply, as recently seen in the cryptocurrency market, many traders are forced to sell their assets due to the decline in value.
This rush to sell, especially when high leverage is involved, can amplify the overall market volatility, triggering a cascade effect and potentially leading to a sharp rise in price fluctuations.
This recent trend resulted in the liquidation of a large amount of bitcoin (BTC-USD) positions. The majority of these were long positions held by derivatives traders who were anticipating the cryptocurrency’s value to rise
However, due to the sudden market decline, they were forced to sell at a loss to minimize further losses.