In the past 24 hours, 181,076 traders in the derivatives market were liquidated across centralized exchanges (CEX), with total liquidations reaching $1.04 billion, equivalent to approximately IDR 16.5 trillion. This comes as Bitcoin dropped below its historic $100,000 milestone on December 5, 2024.
According to data from CoinGlass on Friday (December 6), long-position traders suffered the most significant losses, with liquidations amounting to $745.4 million.
The bulk of the liquidations stemmed from Bitcoin positions, totaling $586.5 million, with $427 million attributed to long positions betting on Bitcoin’s continued price surge.
In crypto trading, liquidation occurs when an exchange forcibly closes a trader’s position due to insufficient margin to maintain it. This typically happens in futures trading when traders leverage borrowed funds, leaving them unable to sustain their positions amid significant price movements.
Largest Liquidation in Three Years
The mass liquidations followed Bitcoin’s steep drop from its all-time high of $103,900 on Thursday morning (December 5). After reaching its peak, Bitcoin underwent a sharp correction, falling below $99,000.
A report from The Block indicated that total crypto liquidations touched $1.1 billion as Bitcoin briefly plummeted to $94,000 within hours. This marks the largest single-day liquidation in the crypto market since December 2021, with Bitcoin alone contributing over $560 million to the total.
Rachel Lucas, an analyst at BTC Markets, described this event as a classic case of a “leverage flush,” wherein targeted sell-offs in specific liquidity zones trigger stop-losses and liquidations at key price levels.
“Market makers and large players often exploit such situations by driving the price beyond $100,000 to attract retail interest, only to reverse the price sharply and liquidate leveraged positions on both the long and short sides,” Lucas explained.
She further noted that excessive leverage by retail traders during Bitcoin’s price surge amplified the liquidation effect. Many traders, driven by Fear of Missing Out (FOMO), opened long positions at elevated levels, while whales strategically sold off their holdings.
Lucas emphasized that large-scale liquidations like this often serve to reset overheated funding rates and reduce leveraged exposure in the market. This can help stabilize the market and pave the way for potential price recovery.
As of now, data from CoinMarketCap shows that Bitcoin is attempting to recover, trading at $97,900, with a daily trading volume of $147.3 billion.
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