• Bitcoin’s recent liquidation event mirrored past market crashes like FTX and COVID-19.
• Institutional buying interest suggested a potential recovery, despite lingering market volatility.

Bitcoin’s [BTC] recent price drop has sent shockwaves through the market, triggering the largest liquidation of long positions seen in months.

As BTC plunged, traders who had been holding bullish positions were swiftly forced out, resulting in massive losses.

This dramatic sell-off has drawn eerie comparisons to previous market crashes, leaving many to wonder if a similar downturn could be on the horizon.

A market reset in motion?

Recent data shows that Bitcoin long liquidations have reached levels unseen since September 2023.

The latest liquidation volume exceeded $180 million, a figure that underscores the extreme confidence traders had in bullish positions before the abrupt drop.

The sudden price decline to approximately $95.3K triggered a cascade of forced sell-offs, rapidly clearing out leveraged long positions.

The market’s high expectations for upward movement were quickly crushed, triggering a drastic liquidation event.

The steep liquidation spike in late January and early February points to excessive leverage. This caught leveraged traders off-guard, leading to one of the most significant market cleanses in recent history.

Bitcoin: Causes and effects of the price drop

The sudden BTC price drop can be traced to several key factors. Overleveraged positions were a major driver, with traders using high leverage being forced to sell as BTC declined, trigg

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Author: Samantha LKM