On August 5, the cryptocurrency market experienced a steep decline, contributing to significant financial losses for investors and traders. This downturn was largely influenced by the global economic slowdown and exacerbated by a dramatic drop in Japan’s stock market. This cascade of events led to one of the most severe liquidation events in recent history, where crypto investors saw approximately $1.08 billion wiped out due to falling prices of major cryptocurrencies such as Bitcoin, Ether, and Solana.
- Total Liquidations: Crypto traders faced about $1.08 billion in total liquidations as prices plummeted.
- Trader Impact: Nearly 300,000 traders were liquidated from their positions, with leveraged and collateral trades being the most affected, according to Coinglass.
- Price Declines: Bitcoin and Ether prices dropped by over 10% and 20%, respectively, erasing hopes for those anticipating a continued bull market.
Crypto Exchanges and Loss Distribution
As Bitcoin’s value tumbled from approximately $65,000 to around $50,000, those holding long positions on various cryptocurrency exchanges incurred losses exceeding $315 million within just 24 hours. Conversely, those betting against the market, or “shorters,” faced losses amounting to $62.23 million.
Ethereum traders were not spared, with those in long positions losing around $305 million and short position holders losing over $50 million during the same period.
| Cryptocurrency | Total Lost by Long Positions | Total Lost by Short Positions |
|---|---|---|
| Bitcoin (BTC) | $315 million | $62.23 million |
| Ether (ETH) | $305 million | $50 million |
Total Liquidations Across Crypto Assets
- Long Positions: The crypto market saw over $930 million lost from long positions across all assets within a day.
- Short Positions: Short position holders lost a total of $163.45 million.
- Overall Impact: An overwhelming 80% of traders experienced losses within less than half a day.
The largest single liquidation order was recorded on the Huobi exchange, where a trader lost $27 million on the BTC/USD trading pair in one fell swoop.
Exchange-Specific Liquidation Data
Most of these liquidations occurred on Binance, the largest crypto exchange by trading volume. Other significant liquidations were noted on platforms like OKX, Huobi, Bybit, and BitMEX.
Amidst this market turmoil, hackers utilized the opportunity to profit by using funds linked to a previous hack on the crypto bridge Nomad. As Ether’s value dipped sharply—falling from about $2,760 to $2,172—hackers used this chance to buy 16,892 Ether at reduced prices and moved these funds through Tornado Cash, a crypto mixer, to obscure their trail.
This recent event underscores the high-risk nature of the cryptocurrency market, especially during times of global financial instability. As traders and investors navigate these challenging waters, the lessons learned from such drastic downturns will be crucial in shaping future strategies and risk management practices.
Featured image credit: rawpixels via Freepik
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