Bitcoin fell roughly 3% on August 22, triggering $547 million in forced liquidations as leverage built up during its rally from $64,000 unwound. Days later, bitcoin slid again after Federal Reserve Chair Kevin Warsh told the Jackson Hole symposium the central bank still has work to do on inflation.
Bitcoin dropped roughly 3% on August 22, sliding from a recent peak near $79,500 to around $77,000. The move triggered a cascade of $547 million in forced liquidations across leveraged positions, with longs bearing the vast majority of the losses.
Leverage cuts both ways
Traders in the perpetual futures market routinely run leverage between 50x and 100x, meaning a 2% move against a position can wipe out its entire margin. Forced closures then become market orders that accelerate the selling. On Hyperliquid, one of the more prominent decentralized perpetual exchanges, individual liquidation events ranged from $23 million to $48 million.
A rally built on borrowed money
The pullback followed a sharp rally that had carried bitcoin up from lows around $64,000, a run that delivered roughly 24% in gains. That rally had already wiped out between $1 billion and $3.5 billion in short positions across multiple sessions. Momentum traders piled in near the highs, stacking leverage on top of an already extended move, a run supported by increased US Treasury bond buybacks and favorable regulatory signals toward crypto.
A Fed speech revives the selling
Bitcoin fell again days later, dropping 3.2% over 24 hours to $77,801.86 on Friday, giving back almost all of a weekly gain that had reached double digits. The slide followed Warsh's first Jackson Hole address as Fed chair, in which he said inflation is running above the Fed's target. According to The Defiant: "Otherwise, we have work to do."
Even so, US spot bitcoin ETFs took in $242.3 million on Thursday, lifting the week's inflows to $1.13 billion, a sign demand from that channel held up through the price swings.
Sources: Crypto Briefing, The Defiant
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