Crypto Liquidations Plunge 76% as Bitcoin Stabilizes Above $80,000

Crypto liquidations have seen a substantial decrease, falling by around 76% over the last two weeks. This decline is closely tied to Bitcoin's price action, which has been consolidating above the $80,000 mark. Between March 12 and March 25, long liquidations amounted to $1.26 billion, while short liquidations totaled $1.14 billion. This is a significant drop from the previous period, between February 24 and March 12, when long liquidations reached $7.2 billion and short liquidations were $2.8 billion. The reduction in forced position closures aligns with lower intraday price swings across major exchanges during the latter period.

Bitcoin's price opened at $82,857 on March 12 and closed at $87,330 by March 25, trading within a narrower band compared to the previous two weeks. This consolidation phase indicates a period of relative calm, where traders are less inclined to take on high-risk positions, thereby reducing the overall liquidation risk. The end of February into the first half of March saw sharp directional moves, with Bitcoin falling below $79,000 on March 10 before rebounding, coinciding with the peak in long-side liquidations. As open interest remained elevated across futures markets, the liquidation decline points to more measured market participation and reduced leverage risk among traders.

While directional bias in liquidations was more balanced and even began to increase slightly during the second half of March, positioning remained active across derivatives platforms. Reduced leverage has a stabilizing effect on volatility as price swings become less pronounced without leverage amplifying moves. This trend suggests that market participants are becoming more confident in Bitcoin's price stability, leading to a decrease in leveraged positions that could be liquidated during price fluctuations. This development is a positive sign for the crypto market, as it reflects a more mature and less volatile trading environment.