A sharp drop in Bitcoin’s price led to the liquidation of over $450 million in long positions across the crypto market. The plunge, triggered by rising geopolitical tensions in the Middle East, sent shockwaves through the market, with Bitcoin (BTC) falling as low as $60,300 before recovering slightly.
Impact of Bitcoin’s Sudden Drop
The market saw widespread liquidations, with data from CoinGlass showing that Bitcoin traders betting on price increases lost $122 million, while Ethereum (ETH) traders faced nearly $100 million in liquidations. Smaller alternative tokens (altcoins) were also hit hard, with a total of $85 million in liquidations. Notably, memecoin Pepe (PEPE) saw an unusually high liquidation figure of $10 million.
Large-scale liquidations occur when traders using leverage are unable to meet margin requirements, forcing exchanges to close their positions. Such liquidations can exacerbate market downturns, as they often signal panic selling and lead to cascading price drops.
Geopolitical Factors and Market Outlook
The crypto market’s decline followed an escalation in tensions between Iran and Israel, as Iran launched missiles targeting Israeli locations. This geopolitical unrest, combined with uncertainty in global financial markets, dented the performance of risk assets like Bitcoin. Despite the downturn, 86% of futures traders remained bullish heading into October, positioning for higher Bitcoin prices later in the month.
While the market took a hit, some analysts believe that the liquidations may mark a short-term bottom, with prices potentially rebounding in the coming weeks.
Source: CoinDesk
