The reversal of fortunes on November 14th has led to the largest leveraged position liquidation in the past three months for cryptocurrency investors. The drop in Bitcoin (BTC) and altcoins triggered the liquidation of over $300 million in leveraged long positions according to current data.
According to CoinGlass data, the recent market-wide drop in the last 24 hours has caused the liquidation of leveraged long positions (positions opened with the expectation of higher prices) of over $307 million. The biggest long liquidation in a day since August 17th, when Bitcoin dropped from over $28,000 to around $25,000 in just a few minutes, was recorded.
Despite the generally supportive environment for risky assets following the lower-than-expected October inflation data, which sharply boosted stocks and significantly reduced bond yields, the price of BTC fell by 4% to $35,000. The drop affected the overall cryptocurrency market, including Ethereum, which dropped by 6% to $2,000.
Unlike the past few weeks, the drop on November 14th is holding up against subsequent short squeezes. Liquidation occurs when an investor is forced to close a leveraged position on an exchange due to partially or completely losing their margin or funds. Successive liquidations can increase price volatility as investors close their positions and clear excess leverage from the market.
CoinGlass data shows that the large-scale liquidations caught most investors unprepared for the sudden drop in prices, affecting 88,667 investors. Bitcoin experienced the largest liquidation with $133 million, followed by Ethereum with $70 million.
Last week, JPMorgan analysts highlighted in a report that investors were overly optimistic about the impact of the approval of a spot Bitcoin exchange-traded fund (ETF) on prices, suggesting that this excessiveness has driven the recent rally in cryptocurrency prices too far.