Crypto markets experienced significant volatility just before Bitcoin’s halving, as the price of the asset fluctuated between $61,000 and $64,000 in less than two days.
The market turbulence led to a rise in liquidations in Bitcoin (BTC) positions and across the broader digital asset ecosystem, as reported by CoinGlass. Long BTC positions were hit the hardest on April 18 when the token briefly dropped below $62,000.
Traders who had bet on higher Bitcoin prices faced liquidations totaling over $57 million across various trading platforms. On the other hand, investors who had taken short positions, anticipating price declines, lost more than $36 million within a 24-hour period.
One notable liquidation order was for $5.3 million BTC/USDT pair on the crypto exchange OKX, making it the largest single liquidation at that time. In total, more than 74,571 traders saw their positions wiped out from the market.
Ethereum (ETH), the second-largest cryptocurrency, followed BTC with liquidations exceeding $53 million, involving both long and short traders. Solana (SOL) recorded liquidations of $14 million, while Dogecoin (DOGE) saw around $9 million in liquidations.
The recent corrections and price swings in Bitcoin seemed to have caused a cooling effect on the market, following its surge to a new all-time high last month, which had lifted the entire crypto market close to its peak for 2021.
At present, the total crypto market is trading flat, down 0.9%, with a valuation of $2.3 trillion according to CoinGecko. During the previous bull run, the sector had surpassed $3 trillion and almost reached this milestone again after the recent surge in BTC.
Historically, volatility before Bitcoin’s halving is not uncommon in the crypto market, with prices often retracing up to 50% before the event triggers automatic code changes. The halving, as the name suggests, will reduce block rewards by half, potentially impacting the revenue of mining companies.
In anticipation of the halving, miners have reportedly increased their mining activity to maximize profits from the blockchain and build up cash reserves to cover operational costs.
It is essential for market participants to be cautious during this period of heightened volatility, especially as Bitcoin’s halving approaches.