Bitcoin and Ethereum have been hit by $1.2 billion worth of cryptocurrency liquidation.
Cryptocurrency markets continue to see sharp declines following the Federal Reserve’s latest policy update, down around 10% in the last 24 hours.
The price of Bitcoin plunged nearly 10% to a low of $93,000. This is a complete reversal from the recent high of $108,268 earlier this week.
The drop took Bitcoin to its lowest level since mid-November, when it was buoyed by market optimism following Donald Trump’s election victory.
Ethereum suffered an even steeper decline, falling nearly 15% to $3,100, its weakest position since late November.
Binance Coin (BNB), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) also recorded double-digit losses, with data showing declines exceeding 10%.
Market analysts attribute this widespread sell-off to the Federal Reserve’s tightening stance on monetary policy. The Federal Reserve adjusted borrowing rates as expected, but reduced its forecast for 2025 rate cuts from four to two. This hawkish outlook put pressure on already weak markets.
Additionally, the Federal Reserve (Fed) made it clear that it has no plans to support the government’s proposed Bitcoin reserve strategy, further dampening market sentiment.
Markus Thielen, head of research at 10x Research, said Bitcoin’s current price level serves as an important indicator for risk management. He pointed out that the Federal Reserve’s firm policy stance and the US Treasury’s potential liquidity adjustments in 2025 have increased market uncertainty.
A liquidation frenzy hit the markets.
The recent market turmoil resulted in more than $1.2 billion in liquidations, affecting 377,618 traders, according to data from CoinGlass.
Long-term traders who had bet on price increases took the brunt of the losses, losing about $1.07 billion. This is one of the biggest setbacks for long-term traders this year.
Meanwhile, short sellers who had bet on prices falling lost $163 million during the reporting period.
Speculators on Bitcoin prices suffered the most losses, with $279 million liquidated, including $227.5 million in long positions. Ethereum traders liquidated $277 million, including $248.7 million from long positions and $28.2 million from short positions.
Traders betting on Solana, XRP, and Dogecoin also lost $55 million, $36 million, and $80 million, respectively.
The most significant single liquidation occurred on Binance and involved a $15 million ETH-USDT trade, further highlighting the intensity of recent market volatility.
