Market Rollercoaster: Crypto Sees $138 Million in Liquidations as Volatility Takes Center Stage

The cryptocurrency market experienced significant turbulence in the past 24 hours, resulting in liquidations totaling over $138 million in leveraged positions. According to Coinglass data, the majority of liquidations, over $120 million, involved long positions, while short positions contributed around $18 million to the total.

Bitcoin, the largest cryptocurrency by market capitalization, saw a decline of more than 2.5% in the last 24 hours, dropping below the $41,000 mark and currently trading at $40,730 as of 7 a.m. ET. Over the past twelve days since the SEC approved multiple spot bitcoin ETFs on January 10, Bitcoin has lost over 7% of its value.

Following the approval, Bitcoin initially rallied above $48,000 before experiencing a sharp fall to around $43,000. Some analysts are now predicting a potential further decline below the $40,000 mark. BitMEX co-founder and Maelstrom CIO Arthur Hayes revealed hedging against downside movement with put options at a strike price of $35,000, expressing a bearish outlook on BTC.

The annualized volatility of Bitcoin has increased from around 46% before the SEC's ETF approval to over 52%, contributing to the liquidation of nearly $30 million worth of leveraged Bitcoin positions. The majority of liquidated positions were longs, totaling over $24 million, according to Coinglass data.

The heightened volatility has impacted unrealized profits among Bitcoin holders, decreasing from multi-year highs of over 90% to the current reading of just over 83%, offering some relief to increased sell pressure, as reported by The Block's data dashboard.