$5.64 billion liquidated in 24 hours as Bitcoin extends losses — Is a relief rally near?

Summary (IA Generated)

The price of Bitcoin (BTC) plummeted by more than 17% in the last 24 hours as the futures market saw mass liquidations across the board.

Liquidations occur when leveraged futures positions fall to a certain threshold.

For example, a position using 10x leverage would get liquidated or turn worthless if the price of BTC drops by 5%.

What triggered the mass Bitcoin liquidation fest?.

If the Bitcoin futures market is highly overleveraged and overcrowded, a minor price movement can trigger mass liquidations.

According to analysts at Santiment, a data analytics firm, an address was responsible for the second-largest Bitcoin transaction of the year, as Cointelegraph reported.

‘As we noted yesterday, there was an 11x exchange inflow spike that initiated #Bitcoin’s price correction from its $58.

Further data combing revealed that an address was responsible for the 2nd largest $BTC transaction of the year, an import of 2,700 tokens to the wallet before a quick sell-off.

This same address also made a 2,000 $BTC import last March right as the Black Thursday correction took place.

In total, it’s made 73 transactions in its one-year existence, for a total of 91,935 $BTC imported, with all tokens moving away within minutes after arrival.

It is a possibility that a major sell-off in the spot market triggered the futures market to see intense selling pressure from many long positions getting liquidated.

However, a pseudonymous trader known as ‘Byzantine General’ described it as a ‘coordinated shakeout,’ and said it is a healthy trend.