BTC price drops $1000 in 15 minutes, Longs account for 98% of liquidations

Bitcoin (BTC) rallied more than 3% in just 15 minutes in European morning hours on Wednesday, taking the largest cryptocurrency with a market cap below $30,000. Further declines took it as low as $29,000, CoinDesk data shows.

While the sell-off did not appear to stem from any immediate fundamental cause, an unexpectedly high March UK inflation figure of more than 10% may have affected market sentiment. Also in the mix: A so-called long hug. More than $25 million in bitcoin futures were liquidated – of which longs, or bets on rising prices, accounted for 98% of positions.

“The warmer-than-expected UK CPI may have weighed on risk assets, including BTC. But the severity of the reaction has been far, far more severe than in other asset classes,”[ads1]; Vetle Lunde, senior analyst at K33 Research, told CoinDesk.

“Seems to be more leverage washout. Binance OI in BTCUSDT perps fell 5.1% in 15 minutes, effects more severe in ETH with larger liquidation volume than BTC,” Lunde said, referring to open interest, or the total number contracts in the futures market.

Liquidation refers to when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of their initial margin. It happens when the investor is unable to meet the margin requirements for a leveraged position, they do not have sufficient funds to keep the trade open.

Large liquidations can signal the local top or bottom of a steep price movement, which can allow traders to position accordingly.

The slide led to a sell-off in the broader crypto market, with Ether (ETH), polygon (MATIC) and dogecoin (DOGE) falling 5.3% over the past 24 hours and solana (SOL) losing nearly 9%.

UPDATE (April 19, 09:10 UTC): Rewrites headline; adds analyst commentary in third paragraph, UK inflation, broader market in final paragraph.