After a sharp fall in Bitcoins price, traders were caught flatfooted Sept. 7. This led to massive liquidations in derivative markets and more than $3.54 trillion was liquidated.
The amount of liquidations by exchanges over the last 24 hours was $3.54
In the last 24 hours, 330.243 traders were liquidated. The largest single liquidation order was placed on #HuobiGlobal #BTC Value $43.7M
Data source: @bybt_com pic.twitter.com/hNgctWgCgP– CryptoDiffer (@CryptoDiffer September 7, 2021
The bullish sentiment was on the rise following the Labor Day holiday weekend in America. Bitcoin was officially recognized in El Salvador as legal tender. However, the celebrations were quickly ruined by the 16% plunge in BTC.
Cointelegraph Markets Pro and TradingView data show that Bitcoins sell-off began in the early hours and continued into the afternoon. Bitcoin dropped to $42,837, before dip buyers arrived and bid it up to $46,500.
Chart for BTC/USDT 4 hours TradingView
Here are the comments of traders about the rapid sell-off. Also, what should you be looking out for as the market attempts amidst the chaos?
As BTC sells off, longs are liquidated heavily
Willy Woo, an analyst on the chain, posted the following tweet describing todays developments. He provided a fact-focused analysis about the markets current state.
Day opened with an equities risk-off.
Some sellers of BTC.
Moderate levels of fundamental inflows (selling).
Stop hunting / liquidity collapse.
BTC liquidations – $1.1b
Investor fundamentals are not supported overall on-chain.
Exchanges are currently in outflows (buying).– Willy Woo (@woonomic), September 7, 2021
Woo noted that the risk-off in the financial markets made the day more risky, which placed pressure on the crypto market, which grew as the day progressed.
The subsequent sell-off led to $1.1 billion in Bitcoin liquidations. However, on-chain data doesnt suggest that investors are in hurry to close their positions. Recent activity indicates that exchanges are still in buying mode.
Woos follow-up tweet shows how surprising todays market move was. It is a reminder of the importance of risk management in crypto markets.
“Im not sure what happened, but this is the sequence of events. “The sell-off was mainly due to derivative markets (like most crashes).
Possible outlier detected
Michael van de Poppe (market analyst, Cointelegraph contributor) provided additional analysis of today’s Bitcoin price movement. He also pointed out the role overleveraged traders had in today’s price action.
#Bitcoin has lost the $49K threshold as critical support and is now crashing through it.
What has just happened?
In a chain reaction, overleveraged positions are liquidated causing a huge wick.
It will be considered an outlier if the wick closes at $47/48K.
Opportunities.– Michael van de Poppe (@CryptoMichNL) September 7, 2021
According to Poppe, if BTC can manage to close above the $47,000 to $48,000 range following this pullback, the move will be considered an outlier to the previously-established trend and a good buying opportunity, should the uptrend resume.
Related: El Salvador purchases the dip after Bitcoins price crashes to $42.9K
All traders werent caught off guard
The markets downturn did not catch all participants unawares, as demonstrated in this tweet by Crypto_Ed_NL analyst and pseudonymous user on Twitter.
You feel lucky that you didnt get liquidated in the corrective action earlier today?
Dont give up on getting dry, new pants! It might not be over yet. pic.twitter.com/DIp9USNfK7– September 7, 2021, Crypto_Ed_NL (@Crypto_Ed_NL).
The following chart was included in a follow-up tweet. It shows that the situation played out exactly as Crypto_Ed_NL warned.
BTC/USDT 15 minute chart Source: Twitter
“BTC reached green box. Lets see what happens… Should it be enough for this correction?
The total cryptocurrency market is now worth $2.103 trillion, and Bitcoins dominance rate of 42.1%.
com. You should do your research before making any investment or trading decision.