Bitcoin Faces Sharp Decline Amid Market Correction
Bitcoin experienced a notable price correction, dropping to $103,900 with a 2.49% decrease in the last 24 hours. Over the past week, the leading cryptocurrency has fallen by approximately 8%. The downturn has resulted in widespread liquidations across the crypto market, particularly impacting traders using leverage.
Liquidations Impact Leverage Traders
The recent volatility led to exchanges triggering the liquidation mechanism. When the market moves sharply, leveraged traders are at risk of losing their positions if the price exceeds their available collateral. In these cases, exchanges automatically close both long and short positions. This process helps prevent negative account balances but results in forced asset sales.
According to data from CoinGlass, liquidations have occurred across various cryptocurrencies, not just bitcoin. When liquidations happen, they increase the supply of digital assets on the market and can amplify the initial price drop. This selling adds further downward pressure on the entire crypto sector.
Broader Market Effects
The selloff has extended to other digital assets, highlighting the risks associated with leverage trading during sharp corrections. The derivatives market, in particular, has demonstrated its vulnerability to sudden market movements.
At present, bitcoin continues to find support near $100,000. However, market observers note that any additional liquidations could deepen the current downward trend in the short term.
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