Bitcoin surged to a high of $64,037 on Wednesday, marking its strongest momentum since November 2021, only to reverse sharply and drop nearly 7% to around $59,400 within hours. According to the CoinDesk Bitcoin Index (XBX), the sudden volatility sent shockwaves across the entire cryptocurrency market, triggering over **$700 million in liquidations** across digital assets in the past 24 hours. At the time of writing, BTC had stabilized around $61,122, but not before leaving leveraged traders reeling from one of the most aggressive price swings of early 2025.
The rapid ascent and subsequent correction highlight the fragile balance between bullish momentum and market overextension — especially in a landscape increasingly driven by institutional interest and retail speculation.
A Rollercoaster Ride for Bitcoin and Altcoins
Bitcoin’s rally above $60,000 for the first time in over two years ignited widespread excitement across crypto markets. Momentum built quickly as traders anticipated further gains, pushing BTC to an intraday peak of **$64,037**. However, the surge proved unsustainable as profit-taking and short-term fear triggered a cascading sell-off.
This abrupt reversal didn’t just impact Bitcoin. The broader market followed suit, with the CoinDesk 20 Index (CD20) falling nearly 5% after briefly hitting a new all-time high of 2,260 earlier in the day. Major altcoins such as Ethereum (ETH), Solana (SOL), XRP, Cardano (ADA), Dogecoin (DOGE), and Avalanche (AVAX) saw losses ranging from 4% to as high as 9% within a single hour.
Such synchronized declines underscore how tightly correlated digital assets have become during periods of high volatility — a trend that benefits diversified portfolios during rallies but amplifies risk during corrections.
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$700 Million Wiped Out: The Cost of Leverage
One of the most dramatic consequences of Wednesday’s price swing was the mass liquidation of leveraged positions. Data from CoinGlass reveals that over $700 million in long and short positions were forcibly closed as prices swung wildly.
Liquidations occur when traders using margin or futures contracts fail to maintain the required collateral as prices move against them. In this case, both bulls and bears were caught off guard:
- Long liquidations: Traders who bought BTC on leverage expecting prices to rise were hit hardest when the market reversed.
- Short liquidations: As BTC initially surged past $64K, short-sellers betting on a decline also faced forced exits.
This dual-pressure scenario — where both upward and downward moves trigger cascading liquidations — is characteristic of highly speculative markets with elevated open interest. It also serves as a reminder of the risks associated with high-leverage trading, particularly during news-sensitive or low-liquidity periods.
Notably, this event marks one of the largest single-day liquidation events since August 2023, when a similar drop in BTC price led to over $1 billion in derivatives losses. While not quite matching that scale, the current wipeout signals growing market depth — and vulnerability.
Record Volumes in Spot Bitcoin ETFs Signal Institutional Demand
Amid the chaos, a more constructive narrative emerged: unprecedented trading volume in U.S.-listed spot bitcoin ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) alone recorded $3.3 billion in daily trading volume, more than double its previous record.
According to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, total spot bitcoin ETF volume approached $8 billion on February 28, reflecting surging institutional and retail participation. These figures suggest that even amid sharp price corrections, investor appetite for regulated exposure to Bitcoin remains robust.
The success of spot ETFs has fundamentally altered BTC’s market dynamics by:
- Increasing liquidity and price discovery mechanisms.
- Attracting traditional finance (TradFi) investors wary of direct crypto custody.
- Reducing reliance on offshore exchanges and unregulated platforms.
As these products mature, they may help dampen extreme volatility over time — though their current influence appears more additive than stabilizing during breakout events.
Coinbase Glitch Adds Confusion Amid Market Frenzy
Adding to the day’s turbulence, some Coinbase users reported seeing zero balances in their accounts during the height of the rally. The glitch, which affected a subset of customers shortly after BTC broke $60K, caused panic among users who feared their funds had been lost or compromised.
Coinbase quickly addressed the issue, attributing it to a temporary syncing error rather than a security breach. The platform confirmed that no funds were at risk and that services were restored for most users within hours.
Still, the incident highlights ongoing challenges faced by major exchanges in scaling infrastructure to meet surging demand during volatile market conditions — a concern that could grow if adoption continues at its current pace.
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Frequently Asked Questions (FAQ)
Q: Why did Bitcoin drop so suddenly after hitting $64K?
A: The drop was likely triggered by a combination of profit-taking after a rapid rally, technical resistance at key levels, and automated selling from leveraged positions being liquidated. High volatility often follows breakout attempts without sustained buying pressure.
Q: What are liquidations in crypto trading?
A: Liquidations occur when traders using borrowed funds (leverage) lose their initial margin due to adverse price movements. Exchanges automatically close these positions to prevent further losses, often exacerbating price swings.
Q: How do spot Bitcoin ETFs affect price volatility?
A: While ETFs increase overall market liquidity and attract institutional capital, they can also contribute to short-term volatility during launch phases or high-volume trading days. Over time, they may help stabilize prices by reducing reliance on speculative derivatives markets.
Q: Are my funds safe on exchanges like Coinbase?
A: Reputable exchanges like Coinbase store the majority of user assets in cold storage and carry insurance policies. However, temporary technical glitches can occur during high-traffic events. Using self-custody wallets adds an extra layer of security.
Q: Was the $700 million in liquidations mostly from long or short positions?
A: Both long and short positions were significantly impacted. Longs were hit during the initial crash from $64K, while shorts got squeezed during the earlier rally phase — a classic "two-way squeeze" common in volatile markets.
Q: Could this price action signal a larger correction ahead?
A: While short-term corrections are normal after sharp rallies, fundamental drivers like ETF inflows, halving anticipation, and macroeconomic factors continue to support long-term bullish sentiment. Technical analysis suggests $58K–$60K may act as strong support.
The events of February 28 serve as a powerful reminder: in cryptocurrency markets, opportunity and risk travel hand in hand. While Bitcoin’s climb toward $64K showcased growing confidence, its swift retreat revealed lingering fragility in leveraged positions and exchange infrastructure.
For investors, the key takeaway lies in risk management, diversification, and understanding market mechanics — especially as institutional adoption reshapes the landscape.
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