Bitcoin Drops 3.9% Amid $620M Liquidations, Recession Fears

The crypto market experienced a tumultuous week, with significant liquidations primarily impacting Bitcoin, resulting in a substantial loss of $620 million within a 24-hour period. This abrupt downturn was exacerbated by escalating recession fears, which put traders and institutions on edge and prompted widespread margin calls. The market turmoil led to a massive shakeout, with 225,381 traders liquidated. Long positions were particularly hard hit, accounting for $529.4 million in losses, while short positions saw $91.1 million in liquidations. Bitcoin was at the center of this liquidation spree, with $239.5 million in positions wiped out, primarily from long traders caught off guard by the market downturn.

Analysts highlighted the severity of the recent market turmoil, noting that Bitcoin long liquidations exceeded those seen during major collapses such as 3AC, Celsius, and FTX. The wave of liquidations comes as Bitcoin struggles in the market, facing renewed downward pressure. Contrary to expectations, President Donald Trump’s Strategic Bitcoin Reserve executive order triggered a sharp decline in Bitcoin’s value. Furthermore, the downturn intensified as recession fears escalated, adding further uncertainty to the market.

Arthur Hayes, former CEO of BitMEX, suggested that Bitcoin may retest its crucial support levels at $78,000 and $75,000 amid this chaotic backdrop. He predicted that if $78,000 fails to hold, $75,000 will be the next critical support level. Hayes also pointed out a large amount of open interest (OI) in Bitcoin options between $70,000 and $75,000. Thus, if BTC enters that range, it could lead to heightened volatility. For now, BTC continues to hold above $80,000. At the time of writing, it was trading at $82,629, down 3.9% in the past 24 hours.

The broad impact of Bitcoin’s price drop was felt across the sector. The total crypto market cap suffered a $148 billion drop. Ethereum (ETH) was the second most affected asset, with $108.5 million in liquidations. ETH was down 5.3% over the past day, trading at $2,062 at press time.