Bitcoin Plunges to $64K as U.S. Tech Rout Hits Crypto, Leading to $250M Long Bets Being Liquidated

This 3% drop in Bitcoin (BTC) occurred amid a broader stock market downturn, reflecting weakening sentiment for risk assets such as cryptocurrencies. The sudden plunge led to over $250 million in bullish bets being liquidated, the largest amount since early July.

Liquidations happen when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This serves as a signal that leverage is being flushed out from popular futures products, indicating a short-term decrease in price volatility. This mass liquidation can exacerbate price declines, leading to a cascading effect that intensifies the initial drop.

Ether (ETH) longs were particularly affected, with $100 million wiped out due to a 7.5% slump in the token amid outflows from the newly launched ETH ETF. Binance saw the highest liquidations among exchanges at $118 million, with 88% being long trades. OKX and Huobi, popular among Asia-based traders, recorded liquidation rates of up to 94% for long trades.

The crypto market decline coincided with a significant drop in U.S. technology stocks on Wednesday. The tech-heavy Nasdaq 100 index lost 660 points, marking its biggest drop since 2022. Mixed quarterly earnings from Google parent Alphabet (GOOG) and Tesla (TSLA) contributed to this decline, with shares of these companies falling as much as 12%. Collectively, the “Magnificent 7” tech stocks lost over $750 billion in market cap on Wednesday, the most on record for the group.

These losses extended to Asian markets early Thursday, with Japan’s Nikkei 225 index falling more than 3% amid concerns that the Bank of Japan might hike interest rates. Additionally, worries over the global economic outlook and potential interest rate hikes by other central banks, including the Federal Reserve, added to the market’s anxiety, further impacting investor sentiment.

The broader economic environment has been challenging for cryptocurrencies, which are often seen as high-risk assets. Inflationary pressures, rising interest rates, and geopolitical uncertainties have contributed to increased volatility and investor caution. The Federal Reserve’s monetary policy decisions, in particular, have a significant impact on market sentiment, as higher interest rates can reduce liquidity and investor appetite for riskier assets like Bitcoin.

Despite the current downturn, some analysts remain optimistic about Bitcoin’s long-term prospects. Factors such as increasing institutional adoption, advancements in blockchain technology, and the ongoing development of regulatory frameworks are seen as potential catalysts for future growth. However, in the short term, the market may continue to experience turbulence as it reacts to macroeconomic events and investor sentiment shifts.