Bitcoin’s billion-dollar wipeouts are now a familiar sight

Detailed summary

Bitcoin liquidations have topped $500 million on 13 separate occasions over the past year, including three instances when they exceeded more than $1 billion, according to…

Bitcoin traders are no strangers to big market swings that can decimate their portfolios in a matter of minutes. But even going by crypto standards, their wipeouts are getting bigger — and more frequent.

Large liquidation events — whereby more than $500 million worth of Bitcoin positions are obliterated in a single 24-hour session — are becoming a recurring feature in the market, as sharp swings repeatedly flush leveraged traders out of their bets. Bitcoin liquidations have topped $500 million on 13 separate occasions over the past year, including three instances when they exceeded more than $1 billion, according to Coinglass data spanning 28 futures exchanges.

The pattern repeated heading into Friday, when Bitcoin’s slide triggered the liquidation of roughly $1.3 billion in bullish crypto bets over 24 hours, with Bitcoin positions accounting for the majority of that sum.

The episodes underscore the fragility of a market already contending with ETF outflows, an AI-fueled risk-off mood that’s accelerated a downturn in various tokens and continued fallout from the recent $6 billion Binance hack, among other factors. Bitcoin has now slumped more than 20% since Oct. 21, trading as low as $66,586 in Asia on Saturday, its weakest level since August.

“These liquidations have become more prevalent over the last 12 months compared with previous periods,” said Paul Howard, senior director at the trading firm Wincent. Many crypto investors, in search of high-risk, high-reward trading, have embraced leveraged bets, where external events — including market-moving macro headlines — have caused more intense wipeouts, he added.

Derivatives account for roughly three-quarters of trading volume across crypto markets.

Alex Kuptsikevich, chief market analyst at FxPro, said that the use of derivatives have become “the norm even for investors with limited capital.” He pointed to reduced liquidity before the start of European trading hours, where a lack of institutional money means the market’s…

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