According to Coingecko data, the biggest digital asset by market capitalisation has shed all gains made earlier in the week and is now trading at $42,887

Bitcoin has retreated below $43,000, a capitulation of more than 5% in the past 24 hours. The pull back comes after the digital asset broke through a year-to-date high of more than $45,800 on Tuesday.

According to Coingecko data, the biggest digital asset by market capitalisation has shed all gains made earlier in the week and is now trading at $42,887.

The recent decline in prices has prompted a considerable liquidation of long positions on crypto currency exchanges. The volatility has led to the liquidation of over $169 million in bitcoin positions, with the majority, around $137 million, consisting of long positions.

According to CoinGlass data, the overall crypto market witnessed the liquidation of more than $601 million in long positions in the last 24 hours. This contributed to a total of $704 million in total liquidations across major crypto currency exchanges.

As per CoinGlass, within the past 24 hours, 213,999 traders experienced liquidation. OKX, Binance and Huobi were the crypto currency exchanges that experienced the most liquidations.

Liquidations tend to occur during volatile price swings like unexpected downturns. When prices drop sharply, as recently seen in the crypto currency market, many traders are forced to sell their assets because of the drop in value.

This rush to sell, especially when high leverage is involved, can amplify the overall market volatility, triggering a cascade effect and potentially leading to a sharp increase in price fluctuations.

This recent trend resulted in the liquidation of a large amount of bitcoin (BTC-USD) positions. The majority of these were long positions held by derivatives traders who were expecting the crypto currency’s value to increase.

However, due to the sudden market decline, they were forced to sell at a loss to minimise further losses.