Crypto Markets Witness $307 Million Wipeout – Largest Since August

In an unexpected turn, crypto markets experienced their most significant leveraged long wipe-out in three months on Tuesday. Substantial declines led to over $307 million in liquidations of leveraged crypto long positions within 24 hours, a record since August’s Bitcoin crash.

Despite a supportive environment for risk assets post-October’s cooler inflation reading, Bitcoin dropped 4% to $35,000, triggering a broad sell-off. Ethereum also fell 6%, slipping below $2,000.

This market turbulence contrasts with recent “short squeezes” as rising prices triggered liquidations of leveraged bets on lower values.

Liquidations occur when an exchange closes a leveraged position due to margin loss, intensifying price volatility as traders cover positions.

The volume of liquidations suggests the abrupt drop caught most off-guard, with 88,667 traders affected. Bitcoin traders bore the brunt, with $133 million in liquidations, followed by ETH traders at $70 million.

JPMorgan analysts warned last week of an “overdone” cryptocurrency rally, cautioning against over-optimism about the impact of a spot BTC exchange-traded fund approval.

As markets grapple with this downturn, investors and analysts assess the implications of the largest leveraged long wipe-out in recent memory.