The $1.28 billion Bitcoin (BTC) sell-off triggered a wave of market volatility and brought about the following key factors:

A wave of liquidations triggered by leveraged trading:

As the price of Bitcoin approached $64,800, optimism in the market drove a large number of traders to increase their long positions. Due to the existence of excessive leverage, even a slight price decline can trigger a series of liquidations, which will exacerbate the price decline. This is exactly what happened in the market at the same time as the open interest contract dropped sharply, resulting in the forced liquidation of about 4,000 BTC long contracts on Binance Futures.

The risks of excessive leverage:

Excessively leveraged long positions make the market extremely fragile, as even a slight price correction can trigger large-scale liquidations. This sell-off shows that market sentiment quickly turned from high optimism to panic, especially when Bitcoin failed to break through key resistance levels. The sharp price drop not only quickly liquidated the positions of leveraged traders, but also further exacerbated the market's panic.

Selling behavior of large and institutional investors:

The vicinity of $64,800 may be an important profit point, and some institutional investors or whales choose to sell here to avoid the risk of subsequent liquidation. Such large investors usually identify the degree of leverage in the market and sell at key price points to profit at higher prices.

Market fragility:

Selling of this scale indicates that the market is currently in an unstable state, especially when a large number of leveraged transactions are involved. Once market confidence is shaken, even a small correction may trigger a chain reaction, exacerbating the speed and magnitude of the decline.

The market shock caused by this sell-off highlights the double-edged sword effect of leveraged trading, especially when the market approaches key resistance levels and fails to break through, the liquidation of positions will have a huge amplification effect on the overall market.

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