Bitcoin Price Drops Below $59K Leading to $230M in Crypto Liquidations
Bitcoin faced downward pressure, dropping below $59,000 as concerns arose regarding potential sell-offs stemming from Mt. Gox repayments and potential miner sales. This decline also impacted other major tokens like ether and Solana’s SOL.
The defunct exchange Mt. Gox is set to commence the distribution of assets stolen during a 2014 hack in July 2024, following numerous delays. These repayments, to be made in bitcoin and bitcoin cash (BCH), are expected to introduce selling pressure to both markets.
Data from CoinGecko reveals that BTC experienced a 3.3% decline within 24 hours, coinciding with the opening of Tokyo equity markets. This decline in bitcoin value influenced other major tokens, with Ether dropping by 4%, and Solana’s SOL and dogecoin falling by up to 8%.
The CoinDesk 20 (CD20), a comprehensive index tracking major tokens, also experienced a 4.8% decrease in the past 24 hours. Futures trades speculating on higher prices suffered losses exceeding $230 million during this period, as per liquidations data from CoinGlass.
Long liquidations in BTC and ETH-tracked futures totaled over $60 million each, while products tied to DOGE, SOL, XRP, and pepe coin (PEPE) recorded losses of at least $4 million. Notably, these liquidations for long traders marked the highest figures since late June, with Binance leading in total liquidations at over $110 million.
Liquidations occur when exchanges forcibly close leveraged positions due to traders failing to meet margin requirements. This situation arises when traders lack sufficient funds to maintain their open trades.
The recent liquidation data provides valuable insights for traders, indicating the effective reduction of leverage from popular futures products, which can serve as a short-term indicator of decreased price volatility.
In light of these developments, trading firm QCP Capital expressed expectations of a subdued market in the upcoming quarter, attributing this outlook to uncertainties surrounding the Mt. Gox supply release. QCP anticipates a lackluster Q3 for BTC given the prevailing market uncertainties related to the Mt. Gox situation.
