Bitcoin drops 5% and cryptocurrency prices collapse, what's happening? -Blox

This is not the way we want to end the week. the Crypto prices Colors are dark red. Bitcoin, the largest cryptocurrency ever, has to give up 5%. But this is nothing compared to TokenFi, Bonk, and Pepe. These altcoins lost nearly 30%.

$825 million liquidation

In the past 24 hours, 254,643 traders were liquidated, bringing the total number of liquidations to $825 million.

Over the past 24 hours, a whopping $825 million worth of positions in the cryptocurrency market has been liquidated. At the time of writing, this number continues to rise, you can Follow here.

Liquidation means that investors are forced to sell their cryptocurrencies, often at a significant loss. But what exactly happened and what does this mean for the market?

More long than short filter

The majority of the liquidated positions, amounting to $749 million, were long positions. This means that investors were counting on (read: betting) on ​​the rise in the value of the cryptocurrency. However, when the market fell, they had to sell their positions to avoid losing more money.

The remaining $77 million were short-term positions. These are investors who are betting that the value of the cryptocurrency will fall. In this case they were right, but the decline may have been steeper than they expected, or there may have been a temporary increase. This also forced them to close their positions.

cascade effect

This liquidation could have a significant impact on the market. If many positions are liquidated at the same time, this may lead to a further decline in prices. This phenomenon, known as a long squeeze, can throw the market into chaos.

However, it is important to stress that liquidations are a normal part of the cryptocurrency market. They are more common during periods of high volatility, as is often the case around Bitcoin halving.

It is not yet clear why prices are falling and what the exact reason is behind this. Could it be due to turmoil in the Middle East?