Bitcoin’s Price Drop Triggers Major Liquidations

The recent decline in Bitcoin’s price to $91,500 has sparked widespread liquidations across crypto exchanges and leading DeFi protocols such as Aave and Compound.

After hitting $106,000 earlier on Friday, Bitcoin’s value saw a steep descent during the New York trading session before plummeting further over the weekend, potentially due to market manipulation claims. The price dropped to its troubling low on Monday.

Despite this drastic fall on February 3, the situation was somewhat stabilized as prices began to recover, surpassing $101,000 before retracting again. Notably, billions in leveraged long positions were liquidated on exchanges including Binance, OKX, and Bybit.

In addition to leveraged trading, the plunge affected lending protocols, with Aave and Compound forcibly liquidating collateral to safeguard lenders, leading to a significant sell-off within the DeFi sector.

Mass Liquidation Event

From January 31 to February 3, the BTCUSDT chart indicated a 10% loss in Bitcoin’s value, a total deterioration of approximately $2.2 billion in the leveraged positions. This chain reaction extended to DeFi lending protocols, where collateral in wBTC was also liquidated.

Users who had locked in wBTC on these lending platforms experienced severe consequences as their assets were liquidated automatically, with Aave v2 seeing over $782,000 in liquidations and Aave v3 witnessing the highest liquidation day ever with $23.7 million in wBTC sold.

This event serves as a stark reminder of market volatility and the inherent risks of leverage in trading.

Bitcoin Price Movement

Key Points:

• Bitcoin prices fluctuate dramatically between $91,500 and $102,000.
• Significant liquidations have occurred on major exchanges and DeFi platforms.
• DeFi protocols sold millions in collateral as a protective measure.