Over USD 500 million liquidated: extreme volatility shakes the crypto market

In the last 24 hours, the cryptocurrency market experienced a financial earthquake: more than 500 million dollars were liquidated due to abrupt movements in the price of bitcoin (BTC). Leveraged traders, especially those with long positions, were the most affected by the high volatility that left many with no margin to react.

Such events are not new in the crypto world, but their impact remains profound. What happened is yet another demonstration of how unpredictable the market can be when external macroeconomic factors mix with overflowing expectations and excessive leverage.

A real-time shake: from optimism to panic

Bitcoin began on Sunday, May 18, closing around USD 103,200. Within minutes, the price soared to USD 107,113, generating a strong wave of enthusiasm among traders. However, this euphoria quickly faded as the market corrected sharply, bringing the price down to USD 102,119 before stabilizing again near USD 103,000.

This range of movement —almost USD 5,000 in a matter of hours— was enough to trigger a massive wave of liquidations in leveraged positions. To understand the magnitude of this phenomenon: more than 500 million dollars in positions were automatically closed by exchanges in a single day.

Leverage: a double-edged sword

Leverage is a powerful tool that allows traders to multiply their exposure to the market using borrowed capital. In theory, if a trader opens a leveraged position in favor of the correct market movement, the profits can be exponential. But when the price moves in the opposite direction, the effect reverses dramatically.

More experienced traders know that leverage must be used with extreme caution.