Hack shock wipes out $1.5 billion in leveraged crypto bets
Most of the forced closures hit traders betting on higher prices. BNB fell as much as 8%, while some momentum indicators now point to a possible rebound.
The Binance hack did more than drain an exchange. It set off a wave of forced selling that wiped out around $1.5 billion in leveraged bets across the crypto market.
What happened
Crypto futures liquidations rose to about $1.57 billion as bitcoin and ether fell. Bets on rising prices accounted for nearly 84% of the forced closures, and Binance itself handled almost half of the total. Bitcoin traded near $77,000, briefly sliding below that level.
BNB, the token closely tied to Binance, fell between 7% and 8%. Binance co-chief executive Yi He pledged that the exchange will cover all user losses from the hack.
Since then, a rebound has begun to catch out traders who had bet on further falls. Bitcoin held above $76,000, and some momentum indicators pointed to a possible recovery.
Background
A liquidation happens when a trader borrows to increase the size of a bet and the market moves against them. If losses eat through their deposit, the exchange closes the position automatically. In a sharp drop, those forced sales push prices lower, which triggers more liquidations in a chain reaction.
When most liquidations hit long positions, it usually means the market was crowded with optimistic, borrowed bets before the shock arrived.
Why it matters
Large liquidation events often clear out excess leverage. That can leave the market on steadier footing, but it does not guarantee a recovery, and the hack came during a wider sell-off in technology stocks.
For BNB, the key question is confidence in Binance itself. Its price is likely to track how quickly the exchange restores withdrawals and shows that customer funds are fully backed.
Written by Tech Security with AI assistance. Not financial advice. See our disclaimer.