Market commentator Jacob King warns that a major crash could be “catastrophic” for Bitcoin and crypto investors, citing excessive leverage and market vulnerability.
King, CEO of WhaleWire, took to X to point out how Bitcoin’s latest drop has impacted the broader crypto market. In his tweet, he noted that a mere 1% drop in Bitcoin’s price has triggered a liquidation of over $360 million from the crypto market in the past 24 hours. This includes a liquidation of more than $100 million in the last hours.
The accompanying chart confirms that the slight correction in Bitcoin’s price erased roughly $369 million from the market, with long positions accounting for $254.64 million, while shorts stood at $111.78 million.
The analyst expects the crash to be “catastrophic” for investors, especially when many traders try to sell at the same time. His reasoning is that if a 1% decline in Bitcoin’s price could wipe out over $360 million in 24 hours, a significant price crash could be more devastating.
Bitcoin Slumps After Hitting ATH
Notably, Bitcoin has been on a free fall since it climbed to an all-time high (ATH) of $124,457 on August 14. After dropping to $118,000 yesterday, Bitcoin continued its downward journey today and eventually dipped to the $115,000 region early today.
At the current price of $115,569, Bitcoin is down 7.14% from its ATH of $124,457. For many, the ongoing crash is a necessary correction for a significant rally to follow, rather than the beginning of a major downtrend.
Such corrections usually present opportunities for investors who missed the previous rally to buy at discounted prices. Last month, financial expert Robert Kiyosaki echoed this view after Bitcoin retraced from its last ATH of $123,200.
However, Jacob suggests otherwise, speculating that the market faces an unavoidable major crash that could be catastrophic for investors.
Potential Liquidations on Bitcoin Rebound
Meanwhile, Bitcoin’s subsequent price action in the next few hours could determine how much will be erased from the market.
According to CoinGlass data, a drop to $114,000 would wipe out roughly $597.67 million in long positions, while a rebound to $120,000 could trigger $2.23 billion in short liquidations.