Cryptocurrency traders had a tough week as they saw a whopping $320 million wiped out in liquidations, the highest amount seen in at least three months, following the US Securities and Exchange Commission’s (SEC) lawsuit against Binance and its CEO Changpeng “CZ” Zhao. Bitcoin traders lost $119 million, and Ether traders lost $41 million in the past 24 hours due to liquidation. Tokens like BNB, SOL, and ADA experienced significant price drops, declining up to 10% in value.
Massive Liquidations Hit Crypto Traders as SEC Lawsuit Shakes Market
According to data by Coinglass, nearly 119,000 crypto traders were liquidated in the 24-hour period, with the majority of those losses sustained on Binance ($105 million), followed by OKX ($88 million) and ByBit ($43 million).
The SEC’s lawsuit accused Binance of offering unregistered securities, commingling user deposits, and inflating trading volumes. Allegations caught crypto traders off-guard, wiping out long positions and sending markets into a tailspin.
SEC targets Justin Sun, celebrities, and crypto businesses, firing shots in all directions in recent weeks. Coinbase faces SEC Wells Notice, while Silvergate Capital winding down, adding tension and losses to the crypto market.
Uncertainty Surrounds Crypto Market’s Recovery from Liquidity Crisis
The losses have come at a time when crypto markets were on the upswing. Bitcoin had a strong start, surging above $25,000 in February, marking one of its best performances in 14 years. The recent decline has erased CBD’s gains, causing its price to drop to as low as $20,050.
However, not all is lost for the crypto market. Cathie Wood of Ark Invest suggests that Bitcoin’s resilience during the banking crisis may attract institutional investors. Wood observed Bitcoin’s unique behavior, particularly its divergence from equity markets, providing valuable lessons.. We do believe that the behavior of the price through this crisis is going to attract more institutions.” The recovery of the crypto market from this liquidity crisis and the duration of the losses is uncertain.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
