A sudden price decline across the board has trimmed optimism among crypto traders, with over $320 million in long positions liquidated in 12 hours.
In the early hours of Monday, the crypto market suffered its most substantial decline after a period of uptrend. Most leading cryptocurrencies dropped 5-10% of their value within two hours.
With market sentiment largely bullish in the past few months, the latest drop has caught many traders off guard. According to data from Coinglass, over $320 million of long positions were liquidated in just 12 hours with the most recent downturn.
The volatile market conditions also liquidated a smaller margin of traders holding short positions ($40 million). Such liquidation typically reflects traders mistiming their entries during a downturn.
A closer look at the liquidation numbers further revealed that the most losses came to traders holding long positions in Bitcoin (BTC), Ether (ETH), and Solana (SOL). Over $100 million in BTC longs were liquidated, with ETH and SOL seeing liquidations of $75 million and $20 million, respectively.
Market Looks to Bounce Back
One of the strongest indicators of a bull market is the strength and speed at which the market recovers from the drawdown. With most traders still largely optimistic about further gains, such declines may be erased quickly.
The crypto market has aimed to swiftly recover from its most recent setback. Leading cryptocurrency BTC has recovered above $42,000 at the time of writing, a substantial increase from the $40,400 low reached in the wake of the drop.
Meanwhile, the overall crypto market has regained $100 billion, bouncing back from a low of $1.56 trillion, according to CoinMarketCap data.
Time will reveal whether bullish traders have enough firepower to return to the market on course for newer highs or whether the bears will gain an edge large enough to upset the positive momentum built in the past few months.