Bitcoin News Today: Bitcoin's 3.5% plunge triggers $646.5M liquidation with 76.2% from longs

Bitcoin's sharp decline below the $115,300 threshold on July 25 triggered a $646.5 million liquidation cascade within 24 hours, as leveraged long positions were disproportionately affected by the rapid sell-off [1]. The drop from $119,500 to $115,300 accelerated forced closures, with 76.2% of liquidated funds—$492.6 million—coming from longs. This imbalance exposed the fragility of leveraged exposure in a market where aggressive bullish bets dominate. The price swing masked a deeper intraday drop of $4,350, exacerbating margin calls and stop-loss orders that amplified downward momentum [1].

The liquidation event highlighted the interconnectedness of leveraged trading and Bitcoin’s price action. Binance, Bybit, and OKX accounted for 80% of total forced exits, with Binance alone logging $232.9 million in closures, 75% of which were longs. The most intense liquidation occurred during a four-hour period, wiping $201.8 million in positions, $184.8 million of which were longs. Such concentrated unwinds often create self-reinforcing cycles, as automated trading strategies trigger further selling, compounding price declines [1].

Bitcoin’s stabilization above $115,000 post-liquidation suggests the spot market absorbed the increased supply from closed positions. Funding rates for perpetual swaps also normalized, indicating a reset in leveraged exposure. However, the data reveals persistent imbalances: longs accounted for 98% of liquidated funds in the event, underscoring crypto markets’ reliance on bullish positioning. Smaller-cap assets like Solana and XRP also faced significant long exposure losses ($39.2 million and $29.9 million, respectively), despite mixed price movements [1].

The event underscores risks in high-leverage environments where minor price shifts can trigger cascading closures. While Ethereum showed a slightly more balanced profile ($91.1 million longs vs. $61.5 million shorts), the overall trend of overleveraged long positions remains a vulnerability. Market participants may now reassess risk management strategies, particularly as leveraged trading volumes remain elevated. However, with key support levels breached, further volatility could reignite the cycle, challenging both retail and institutional players [1].

Source: [1] [Bitcoin liquidation cascade wipes out $646 million in 24 hours] [https://cryptoslate.com/insights/bitcoin-liquidation-cascade-wipes-out-646-million-in-24-hours/]