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Highlights
- Crypto market experiences historic liquidations of $2.25 billion in a single day.
- Bitcoin traders suffer the most, with $412 million in losses linked to market downturn.
- Binance leads the liquidation losses, with traders losing $121 million.
The crypto market experienced an unprecedented crash on Tuesday, February 3, with a staggering $2.25 billion wiped out in under 24 hours. This event has marked the worst single-day liquidation in the history of the crypto sector, surpassing the previous record of $1.6 billion set during the FTX exchange saga in November 2022. Traders, particularly those holding leveraged positions, felt the full force of the collapse, leading to widespread liquidation across the market.
Bitcoin (BTC) was at the center of the turmoil, suffering a significant 9% drop, bringing the price down to $91,200. The sharp downturn in Bitcoin’s value played a major role in the broader market decline, with approximately $412 million in Bitcoin trades alone contributing to the total liquidation figure. Leveraged long traders, who had been overly optimistic about the potential of the market, bore the brunt of the losses, with $341 million of liquidations tied to long positions.
The dramatic sell-off was largely attributed to the announcement of trade tariffs by U.S. President Donald Trump, which sent shockwaves through the financial markets and caused risk assets, including cryptocurrencies, to plummet. The uncertainty caused by these tariffs led traders to quickly exit the market, further exacerbating the drop in asset prices.
Bitcoin, as the dominant cryptocurrency in the market, accounted for 18% of the total liquidations, with the majority of the damage happening on five major crypto exchanges. Binance, the world’s largest crypto exchange, was the hardest hit, with traders losing an estimated $121 million in liquidations. Other exchanges, including OKX, Gate.io, HTX, and ByBit, saw losses of $72.9 million, $57.8 million, $54 million, and $48 million, respectively.
The sharp market correction has left traders and market participants uncertain about the near-term outlook for Bitcoin and other cryptocurrencies. Despite the massive sell-off, some market analysts are hopeful that Bitcoin could find a bottom at the $90,000 support zone, and that a recovery might be on the horizon once the initial panic subsides.
As the crypto market grapples with the fallout from the crash, traders are now faced with the challenge of navigating a highly volatile environment. While some look for opportunities in the wake of the liquidation event, the market remains under pressure, with lingering concerns about the broader economic impact of the trade tariffs and ongoing geopolitical tensions.
For Bitcoin and the wider crypto market, the next few weeks could be pivotal. The market must find support levels to stabilize, or else further downside risks could manifest. Traders remain on edge, hoping for a reversal, but with cautious sentiment dominating the market in the wake of such a significant event.
This massive liquidation event serves as a stark reminder of the volatility inherent in the crypto market, where leveraged positions can amplify both gains and losses. As the dust settles, it remains to be seen whether Bitcoin can regain momentum or if the market will continue to face pressure in the coming months.
The crypto community is now watching closely to see how the market will recover from this sharp downturn. The focus will be on Bitcoin's ability to reclaim key support levels, while traders across the board will be analyzing the broader market dynamics to determine where the next moves might lie.
