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At the opening of the first trading day in the U.S. market after the holiday, the price of Bitcoin fell by about $3,000, falling rapidly within a few hours.
This sudden drop led to a wave of stress in the derivatives market, resulting in more than $70 million in leveraged long positions being liquidated in four hours, according to data from the “Coinglass” platform.
The move reflects the extreme volatility of the cryptocurrency market, as financial leverage magnifies profits and losses.
When prices fall rapidly, traders who hold leveraged buy positions run the risk of being forced to liquidate because the collateral is no longer sufficient to maintain those positions.
Large liquidation events tend to exacerbate declines because automatic selling puts additional pressure on the market when prices are already falling.
At the time of writing, Bitcoin was trading at $87,575, down around 2% in the past 24 hours, according to the latest available data.
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