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Coinglass data reveals that cryptocurrency traders experienced a staggering $1 billion in losses due to liquidations within the last 24 hours. This unfortunate event unfolded as the digital asset markets endured one of the most severe sell-offs of the year, causing Bitcoin's price to plummet to its lowest point in two months.

Bitcoin, the dominant and pioneering cryptocurrency, experienced a 7% decline to approximately $26,900. Earlier during the day, it had fallen to nearly $25,000, marking its lowest point since June.

Long positions worth a staggering $821 million, held by traders who anticipated price increases, were decimated as the frantic rush to exit commenced, according to data from CoinGlass. The Bitcoin (BTC) trading community bore the major brunt of these losses, enduring a staggering $472 million in long positions being liquidated, closely trailed by ether (ETH) at $302 million.

According to Coinalyze data, this marked the most substantial amount of BTC liquidations within a single day since June 2022, a period closely associated with the sharp decline of the primary cryptocurrency's value to $17,000.

Liquidations in the last 24 hours (Coinglass)

The liquidations took place as cryptocurrency prices plummeted during Thursday afternoon in the United States, transforming this month's gradual decline into a severe downturn amidst concerns in the financial markets. These concerns were driven by weakening foreign currencies, apprehensions about the Chinese economy, and bond yields surging to levels not seen in several years. Major cryptocurrencies like BTC and ETH experienced nearly double-digit losses, dropping to their lowest points since early summer.

Liquidations occur when an exchange forcibly closes a leveraged trading position because the trader's initial investment or "margin" has experienced a partial or complete loss. This happens if the trader is unable to fulfill the margin requirements or lacks sufficient funds to maintain the position. In times of sharp declines in asset prices, this situation can trigger a domino effect of liquidations, amplifying both losses and further drops in prices.