n March 19th, Bitcoin prices plunged through critical support at $64,000, triggering over $620 million in liquidations across major exchanges in a matter of hours. The heavy sell-off saw Bitcoin drop as low as $63,100 according to CoinMarketCap data, cracking an important support level set in mid-March that had helped launch BTC to new all-time highs repeatedly over the prior two weeks.
As prices tumbled below $64K, leveraged long positions came under extreme pressure. Data from CoinGlass showed a whopping $654 million worth of longs facing liquidation in Bitcoin futures contracts alone. Added across all crypto assets, total liquidations for the 24 hour period broke records at over half a billion dollars.
Adjusting Leverage
In the fallout, leveraged traders scrambled to reduce risk. CoinGlass metrics showed total Bitcoin leverage had declined sharply from historic peaks set in prior weeks. Yet concerningly, sizable long positions remained clustered just below the $60,000 zone according to their 30-day heatmap. With volatility spiking, these open longs leave traders exposed to further potential downside.
In response to the losses, exchanges like BitMEX and OKX slashed leverage ratios available to traders. Where some users had been leveraging positions up to 100x, limits were rolled back to 20x or less. The moves aimed to curb the potentially destabilizing effects of deleveraging while market conditions remained choppy.
A Warning to Trader
The half-billion dollar liquidation event served as a sharp reminder of risks in trading with leverage during volatile swings. While many had fixed their sights steadily on new all-time highs, the drop highlighted Bitcoin's ongoing susceptibility to corrections. Major support breakdowns as witnessed at $64K could see steep sell-offs accelerate as leveraged positions are forcefully unwound.
As the dust settled, traders began reestablishing new leveraged bets even at dampened ratios. However sizable clustered longs persisting sub-$60K show risks remain. Only continued stability around reclaimed support levels can ease leverage concerns following the record $620 million loss event as Bitcoin whipped below $64,000.
Charting the Recovery
Over ensuing days, Bitcoin prices rebounded albeit facing resistance near prior support-turned-resistance at $64K. At the time of writing it traded broadly sideways between $62-64K as buyers and sellers jostled for position. Should recovery continue apace, reclaiming $64K as support would be a healthy sign. But with leverage remaining elevated any renewed weakness could kick start fresh volatility.
Traders will watch upcoming sessions closely for clues on Bitcoin's next directional move. A decisive break above $64K may see bullish momentum resume towards new highs. Yet further downturn could spell more liquidation angst for leveraged players on shaky ground since the record $620 million liquidation event of March 19th.
