Bitcoin price has fallen below $43,000. (NurPhoto via Getty Images)
Bitcoin has fallen back below $43,000 (£33,870), capitulating over 5% in the last 24 hours. The decline comes after the digital asset broke a yearly high above $45,800 on Tuesday.
According to data from Coingecko, the largest digital asset by market capitalization has lost all the gains made at the beginning of the week and is now changing hands for $42,887.
The recent price drop has resulted in significant unwinding of long positions on cryptocurrency exchanges. The volatility has led to the liquidation of more than $169 million worth of Bitcoin positions, with the majority, about $137 million, consisting of long positions.
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According to CoinGlass data, over $601 million worth of long positions were liquidated across the entire crypto market in the last 24 hours. This contributed to $704 million in total liquidations across major cryptocurrency exchanges.
According to Coinglass, 213,999 traders were liquidated within the last 24 hours. OKX, Binance and Huobi were the cryptocurrency exchanges that experienced the most liquidations.
Bitcoin liquidations are increasing
Liquidations typically occur during volatile price swings such as unexpected downturns. When prices fall sharply, as was recently seen in the cryptocurrency market, many traders are forced to sell their assets due to the loss in value.
This selling frenzy, especially when high leverage is involved, can increase overall market volatility, triggering a cascading effect and potentially leading to a sharp increase in price volatility.
Read more: Bitcoin rally fuels $50,000 speculation on spot ETF anticipation
This recent trend resulted in the liquidation of a large amount of Bitcoin (BTC-USD) positions. Most of these were long positions taken by derivatives traders who expected the cryptocurrency to rise in value
However, due to the sudden market decline, they were forced to sell at a loss to minimize further losses.
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