Over US$3.7 billion worth of crypto positions were suddenly liquidated this week as Bitcoin (BTC) and major altcoins tanked. The market downturn was preceded by a flash selloff mostly in bitcoin, which resulted in an 11.6 percent drop in the overall cryptocurrency market capitalisation, down to US$2.16 billion over the past 24 hours.
According to data from Bybt, US$3.71 billion worth of crypto futures positions were liquidated in 24 hours. A total of 375,824 traders were forced out of the market as they got overleveraged due to the sudden drop in crypto prices. The single largest liquidation (US$43.7 million) happened on the Huobi-BTC market.
The total value of bitcoin liquidated at the time was US$1.39 billion. Within two hours, the price of BTC tanked by 11 percent, from US$51,101 to $45,299 on Coingecko. However, major crypto exchanges Binance and Coinbase recorded as low as US$42,900 and U$42,850, respectively.
Major altcoins that were significantly affected in the flash crash include Ether (US$928.7 million), Ripple ($223.78 million), Solana ($95.1 million) and Cardano ($84.28 million).
This incident comes as a reminder of how risky leveraged trading can be, noting that it can amplify profits and losses in trading.
What Happened?
The flash crash on September 7 came as a shock to many crypto investors, given the day was supposed to be bullish as El Salvador officially legalised bitcoin. In addition to market volatility, many experts said bitcoin dropped because the El Salvador news was already priced in. Crypto researcher Larry Cermak also pointed out one possible reason was that the funding rates for altcoins were spiking too much:
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