Bitcoin and the wider crypto market suddenly dropped as long positions spiked to a level not seen since the June 28 crash.
The largest cryptocurrency, Bitcoin, crashed over 7% in a few hours on Tuesday, with the asset falling briefly to $58,000. This sparked a wider market capitulation as altcoins bled significantly.
Although the crypto market is widely known for its volatility, price movements of this magnitude always have an underlying cause. Here’s the reason behind the sudden collapse.
Long Traders Got Greedy
Data from Santiment showed that long positions on the crypto exchange dYdX suddenly spiked to the levels seen when Bitcoin reached its all-time high in March. Such spikes saturated the market and prompted a movement in the opposite direction.
A similar greed trend was also seen on July 28 when long traders got greedy amidst a flourishing Bitcoin price. The saturated market, caused by the large long positions, saw Bitcoin drop to $58,000.
The Santiment data further pointed to a reverse trend on August 5, when short positions on dYdX surged as Bitcoin dropped below $50,000. A large short trading volume was seen on the California-based exchange, prompting the market to shake off greedy traders with an upside trend.
Dump Wreck Bulls
The sudden pump sparked a liquidation spree in the crypto market, with bulls the major casualties. Data shows that over $320 million worth of trading positions have been liquidated in the past 24 hours.
Surprisingly, Ethereum bulls were the most rekt, as over $93 million worth of long positions have been wiped out of the market in the past 24 hours. About $9.6 million in late shorts were also liquidated as ETH slightly recovered to $2,476.
Bitcoin traders also experienced substantial liquidation, as $96.56 million in positions were wiped out of the market. $85.42 million were longs, while $11.13 million were shorts. At press time, Bitcoin was trading at $59,438.
Other assets also saw liquidation spikes as altcoins bled terribly. SOL, PEPE, and XRP traders lost $12.12 million, $4.3 million, and $3.15 million, respectively. SOL traded at $147, while XRP recovered slightly to trade at $0.57.
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