Crypto Markets Suffer Setback with $1.7 Billion in Liquidations

The crypto market experienced another significant correction as liquidations reached nearly $1.7 billion over the past day. Among the top 10 cryptocurrencies by market capitalization, Dogecoin, Solana, and Ethereum recorded the largest losses. While the price of Bitcoin fell by 2.3%, holding up better than Ethereum and other major altcoins, Dogecoin experienced the largest loss at 9.9%. Solana and Ethereum faced declines of 6.9% and 6.2% respectively, according to CoinGecko data. The entire crypto market also fell, with market capitalization standing at around $3.98 trillion after a daily decline of 3.7%, according to CoinGecko data. Coinglass data indicated that approximately $1.68 billion worth of positions were liquidated on major exchanges over the past 24 hours, with more than $1.6 billion coming from long positions. About 390,000 traders were liquidated, with the largest single order valued at $12.7 million placed on OKX's BTC-USDT swap. Ethereum recorded liquidations amounting to $501 million, while Dogecoin lost around $61 million, putting both tokens under pressure. Dan Dadybayo, head of research and strategy at Unstoppable Wallet, commented that the massive liquidations reflected an aggressive reduction of leverage in the system. About 95% of the liquidated positions were long positions, indicating it was not a short squeeze but overly exposed bull positions. Users of the prediction market Myriad, launched by DASTAN, the parent company of Decrypt, turned increasingly bearish on Bitcoin on Monday morning. A narrow majority of predictions now expect Bitcoin to drop to $105,000, while a clear majority expect Bitcoin to be above $105,000 in September. The current market situation revealed significant losses in high-risk areas, with disproportionate liquidations of leveraged futures and perpetual positions compared to short positions. Vincent Liu, Chief Investment Officer at Kronos Research, mentioned that despite the short-term turbulence, the liquidations highlighted the capital areas that were overburdened, while a slow rebuilding of market depth is anticipated. The current volatility is based on the macroeconomic backdrop following the recent Federal Reserve interest rate cut, which had little impact on the market and even caused a brief recovery. The future development of the crypto market could depend on the upcoming unemployment claims on Thursday and the inflation data for August on Friday. A dovish interpretation could spark an upward movement, while hawkish surprises could exert further pressure on the market.