Bitcoin Sets New All-Time High, Ushers in $1B Crypto Market Shakeout

On Tuesday, Bitcoin soared to an unprecedented peak in US dollars, surpassing its prior high of $69,000 recorded on November 10, 2021. However, the celebration was short-lived as Bitcoin experienced a 10% drop from its record high, leading to $1 billion in cryptocurrency liquidations and a tumultuous market scenario for leveraged traders.

The digital currency reached a new pinnacle at $69,200 before facing a sharp decline to $59,700, igniting a wave of liquidations. This drastic correction wiped out more than $1 billion in leveraged positions across various digital assets, according to CoinGlass. The volatile market conditions resulted in the elimination of approximately $1.1 billion in derivatives trading positions within 24 hours, with long positions—or bets on increasing prices—constituting $870 million of the total liquidations reported by CoinGlass.

At the time of writing, Bitcoin’s price stands at $63,397, according to CoinMarketCap data.

The surge in Bitcoin’s value was notably influenced by the introduction of several U.S. Bitcoin spot Exchange-Traded Funds (ETFs) in January, attracting a significant number of institutional investors previously unable to directly hold the cryptocurrency. The rally was particularly sparked by the opening of the U.S. stock market at 9:30 am ET, highlighting the impact of ETFs on Bitcoin’s daily trading dynamics.

This milestone not only marks a big win in USD terms but also underscores Bitcoin’s strength against other major currencies such as the Australian dollar, Canadian dollar, euro, and British Pound. The rally led to $536 million in total liquidations within a day, with $286 million from short positions, showcasing the high stakes involved in Bitcoin trading.

Interestingly, this record-setting event defies the historical pattern of Bitcoin reaching new highs only after its “halving” events, which halve the rate of new coin creation. This deviation from tradition comes as the next halving is anticipated in April 2024, signaling a potentially new era for Bitcoin’s market dynamics and investor sentiment.