Nearly $US1 billion in leveraged cryptocurrency positions were liquidated on Monday as prices experienced another sharp drop, extending a broad selloff into its third month. Bitcoin fell as much as 8% to $US83,824 in New York trading, bringing its year-to-date decline to over 9%. Ether also saw a significant drop, plunging 10% to a low of $US2,719, marking an 18% decrease since last December.
The downturn has particularly affected smaller, less liquid tokens, which are often favoured by traders for their volatility and potential for high returns during market rallies. A MarketVector index that tracks the bottom half of the largest 100 digital assets has fallen almost 70% this year, highlighting the severity of the impact on these altcoins.
The cryptocurrency market remains unstable following weeks of selloffs. The initial trigger occurred when approximately $19 billion in leveraged positions were wiped out in early October. This followed Bitcoin reaching an all-time high of $US126,251 just days prior. Coinglass data indicates that these automated liquidations of leveraged positions, a phenomenon known as a liquidation cascade, are contributing to the ongoing market volatility.
