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⚡$250 Million Liquidation by Traders🫠

Croxroad

20 Jan 2024 — 3 min read

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📴 Crypto Market Shakeup

In the last 24 hours, the cryptocurrency market witnessed over $250 million in liquidations, according to Coinglass data. Bitcoin (BTC) and Ethereum (ETH) bore the brunt of forced closed positions, particularly as Bitcoin's price dipped below $41,000, resulting in losses of $81.1 million for traders. Ethereum, the second-largest cryptocurrency, also saw significant losses as its price dropped to $2,400, costing traders $32 million.

The majority of the liquidations, exceeding 90%, were distributed across OKX, Bybit, Huobi, and Binance. Binance executed the most substantial order, closing a long BTC USDT position for $7.31 million.

As of the latest data, the rate of Bitcoin stood at $41,200. Despite the market downturn, recent hours showed more long positions being opened than short ones, indicating a level of confidence among market participants in the potential growth of BTC.

Market observers attribute the decline to Grayscale's active sale of BTC. Grayscale's Bitcoin Trust (GBTC) experienced significant outflows totaling $594 million amid the current market downturn. Concurrently, Grayscale moved 9,840 BTC to Coinbase Prime, amounting to $418 million and bringing the total volume to 41,478 BTC since January 12. The crypto community and experts also note that this decline follows a period of heightened interest in spot ETFs.

🌡️ Grayscale's $529 Million Bitcoin Exodus

Bitcoin, the largest cryptocurrency, faced a significant drop below the $41,000 mark, coinciding with the launch of Bitcoin exchange-traded funds (ETFs) on January 12. The ensuing market downturn was fueled by profit-taking, selling pressure, and notable outflows from Grayscale's Bitcoin Trust ETF (GBTC).

Grayscale's movement of Bitcoin to Coinbase intensified the sell-off. Initially, 4,000 BTC (around $183 million) were transferred, followed by an additional 11,700 BTC (equivalent to $491.4 million) on Tuesday. On Friday, a substantial 12,865 BTC ($529 million) were shifted to Coinbase Prime. In total, 54,343 BTC ($2.313 billion) moved from Grayscale Trust to Coinbase Prime over five consecutive trading days since January 12, contributing to Bitcoin's downward trend.

Adding to the pressure, Bitcoin miners increased their selling activity ahead of the upcoming Bitcoin halving. On-chain data revealed a significant offloading of nearly 10,600 BTC (valued at approximately $455.8 million) by miners in the past 24 hours.

Despite a slight 0.2% decrease, Bitcoin traded at $40,900. The downtrend was evident across different time frames, with declines of 5%, 6%, and 7% over the seven, fourteen, and thirty-day periods, respectively. However, Bitcoin maintained an impressive 98% gain year-to-date.

The combined impact of Grayscale's Bitcoin Trust ETF outflows and heightened selling by miners intensified the downward pressure, breaching the critical support level of $41,000. Attention now turns to how Bitcoin bulls will defend the crucial $40,000 support, which serves as the last line of defence before a potential dip to $37,700. A failure to hold this support level might lead to further declines, possibly reaching $35,800. Despite the current challenges, bullish investors are optimistic that the scheduled Bitcoin halving in April could trigger a significant bull run.

❔ What Happens When Bitcoin Halves?

In the context of Bitcoin, the term "halving" refers to the event where the reward for mining new blocks is halved. This mechanism is designed to simulate diminishing returns and is theoretically intended to increase demand for the cryptocurrency. During a halving, the number of new bitcoins created and earned by miners is reduced by half. This process occurs approximately every four years or after every 210,000 blocks are mined. The aim is to control the rate at which new bitcoins enter circulation, creating scarcity and, in theory, driving up demand among users and investors.