Bitcoin Drops Sharply as $500 Million in Long Positions Are Liquidated

A sharp decline in cryptocurrency prices was recorded late Monday. The industry lost more than $500 million in long position liquidation as Bitcoin and major altcoins lost the recent gains amid the current global economic sentiment. According to the data released by Coinglass, over $530 million in leveraged long bets were wiped out within 24 hours.

Almost $200 million of this amount was tied to the Bitcoin futures, whereas $170 million came from ether (ETH) positions.

Learning About the Recent Market Value Decline

Long liquidations occur when traders use leverage to amplify gains but are unable to meet margin requirements. This results in their positions being forcibly closed by exchanges. In turn, it often intensifies the volatility of the market and triggers a sell-off spree that brings the market value down.

Almost all major cryptocurrencies saw a fall back after the gains of the previous week. Dogecoin (DOGE) and Cardano’s ADA lost value by 7%, whereas XRP, Binance Coin (BNB), and Solana (SOL) all fell by between 6% and 5%.  

This downturn comes after a period of intense rally during which Ethereum surged by 40% and BTC rose above $104k. These were the highest numbers for both cryptocurrencies since the bull market of 2021. However, the recent volatility in the market has led to over $1 billion in short liquidations in the last week.

Market sentiment shifted sharply following reports of a temporary easing in U.S.-China trade tensions. The announcement of tariff removals and renewed cooperation between the two nations appeared to boost the market and drove crypto prices upward.

In addition to the liquidations, futures open interest dropped by over $1.2 billion across major exchanges, signaling a significant wave of deleveraging as traders exited positions.

Analysts suggest this correction could be a healthy reset for overheated markets. Jeff Mei, COO of crypto exchange BTSE, noted that macroeconomic factors remain the key driver. “The next Fed decision in June will likely be pivotal,” Mei told CoinDesk. “A dovish stance could stimulate investment and help avoid a recession, potentially reigniting Bitcoin’s upward momentum.” With eyes now on the Federal Reserve, investors are bracing for continued volatility in the weeks ahead.