Crypto Longs Liquidated: $1.8B Flush Sparks Market Correction
Massive Crypto Liquidation Triggers Market Dip
A significant long liquidation event swept through the cryptocurrency market on Monday, wiping out nearly $1.8 billion in leveraged positions. This marks one of the most substantial market flush-outs of the year, impacting a wide range of traders. Some analysts attribute this to technical factors, while others point to excessive leverage in altcoins.
Data from CoinGlass indicates that over 370,000 traders were liquidated in a 24-hour period. The majority of these positions were concentrated in Ether (ETH) and Bitcoin (BTC), though altcoins also experienced considerable losses.
The liquidations coincided with a sharp decrease in overall crypto market capitalization, which fell by over $150 billion to a two-week low of $3.95 trillion. Bitcoin briefly dipped below $112,000 on Coinbase, while Ether fell below $4,150, representing its largest pullback since mid-August.
Overleveraged Traders: A Recurring Theme
Real Vision founder Raoul Pal noted that such liquidation events are a common occurrence in the crypto market. He explained that the market often becomes heavily leveraged in anticipation of a breakout, leading to liquidations when the initial attempt fails. This often sets the stage for the actual breakout, leaving many sidelined.
Altcoin Leverage Blamed for the Flush
Researcher “Bull Theory” suggested that an “excessive imbalance” of altcoin leverage compared to Bitcoin contributed to the liquidation event. Ether liquidations, exceeding $500 million, were more than double those of Bitcoin positions.
“When altcoin leverage gets this extreme, the market doesn’t ignore it. One sharp move down triggers cascading liquidations. That’s how you flush out weak hands and reset the board.”
Nassar Achkar, Chief Strategy Officer at CoinW exchange, believes the flush-out “may present a near-term adjustment rather than a shift in the long-term structural bull run.”
Potential Dip to Support Zone
IG market analyst Tony Sycamore suggested that Bitcoin's recent lack of correlation with tech stocks or gold could be due to technical factors. He noted that Bitcoin needs time to correct its gains and work off overbought conditions.
“Technically, a dip back into the $105/100k support zone, which includes the 200-day moving average at $103,700, makes sense. It would flush out a few of the weaker hands... and I think set up a nice buying opportunity for a run up into year-end.”
Despite the recent downturn, Bitcoin has only corrected by approximately 9.5% from its all-time high, which is relatively shallow compared to previous bull market pullbacks. While September has historically been a weaker month for Bitcoin, it has often rebounded strongly in October.
