$3.7 billion liquidated as crypto markets react to Biden’s tax scare

Blame the leveraged traders.

Cover art/illustration via CryptoSlate

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Over $3 billion worth of crypto positions were liquidated this morning amidst a broader sell-off, data from multiple sources showed. Some market watchers attributed the drop to a proposal made by US president Joe Biden yesterday.

The crypto drop

‘Liquidations’ occur when traders borrow excess capital from brokerages/exchanges (i.e., ‘margin’ or trading futures) to place bigger bets on the assets they trade. 

They pay a fixed fee for doing so, while exchanges close out these positions at a predetermined price—when the trader’s collateral is equal to the loss on that position. Such a trade is then said to be liquidated.

Yesterday, sources close to Biden reported the US would soon propose a new tax law for wealthy investors and traders—charging as much as 43.5% in tax for gains above $1 million. The aftermath was a sell-off in the stock market, followed by a sell-off in the commodities market, and followed by a sell-off this morning in the crypto market.

The damages

As per data from analytics app Bybt, over 500,000 individual accounts got rekt today. $3 billion worth of liquidations took place, Bitcoin alone accounting for $1.3 billion of the damage.

The largest single liquidation order happened on crypto exchange Huobi: A Bitcoin position to the tune of $11.28 million.

Among other large-cap altcoins, $647.64 million of Ethereum (ETH) positions evaporated, $391.32 million worth of XRP positions were liquidated, and $137.85 million in Binance Coin (BNB) positions were liquidated.

Those who piled in on Dogecoin last week ended seeing the brutal side of crypto too: $245.59 million worth of DOGE positions were liquidated.

At press time, Bitcoin traded as low as $48,500, Ethereum at $2,100, and BNB at $470. The drop is—so far—not as bad as last weekend’s however, over 1 million trading accounts and $10 billion were liquidated then.

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