Bitcoin traders suffer a $1 billion loss as the cryptocurrency plunges over 14% from its recent all-time high. Open interest plummets as speculators retreat from the market. Learn more about the impact on Bitcoin, Ethereum, and Solana.

Cryptocurrency traders utilizing options and futures to expose themselves to Bitcoin (BTC) are facing a significant loss of $1 billion following the cryptocurrency's plunge of more than 14% from its recent peak of $69,200 on March 5.

On March 6, in a post on X, Santiment, an on-chain analytics provider, highlighted a substantial decline in total open interest (OI) on exchanges for Bitcoin, Ethereum (ETH), and Solana (SOL) following BTC's all-time high the previous day.

The open interest for Bitcoin saw a drop of $1.46 billion (-12%) within a few hours, while Ether (ETH) witnessed a decline of $967 million (-15%), and Solana (SOL) experienced a tumble of $424 million (-20%).

Bitcoin briefly reached a new all-time high slightly above $69,200 on March 5, just marginally surpassing its previous peak of $69,044 in November 2021.

Santiment noted that the majority of speculation on price came from traders initiating long positions, expecting Bitcoin to surpass a new all-time high and maintain a price above $70,000.

Conversely, a smaller portion of the activity stemmed from short positions being liquidated as Bitcoin momentarily touched a new all-time high.

“In essence, this decline in open interest can be interpreted as a temporary removal of 'speculative excess' from the markets.”

Open interest refers to the total sum of open positions that traders have taken on a derivatives contract. When a trader opens a new position on a futures or options contract, it increases open interest, whereas closing an existing position decreases it.

Over recent weeks, open interest has surged to unprecedented levels as traders amplified their wagers on Bitcoin's price movements towards new highs.

Despite the sudden downward trajectory of Bitcoin's price, many experts on X elucidated that flush-outs in derivatives are a customary aspect of price fluctuations.

Cryptocurrency trader 'Daan Crypto Trades' informed his 363,000 X followers, "Following a brief surge to all-time highs, we witnessed a sharp decline resulting in the liquidation of numerous long positions," further noting, "Approximately ~$3B in Open Interest was wiped out in this correction."

According to data from Coinglass, approximately 312,500 traders faced liquidation, with total liquidations amounting to $1.13 billion over the past 24 hours.

Currently, Bitcoin is trading at $63,600, marking an 8% decrease from its recent all-time high.