Crypto Futures Market Experiences $659 Million Liquidation
The cryptocurrency futures market has undergone a massive liquidation event in the past 24 hours following a sharp crash in Bitcoin’s price.
Futures Contracts Worth $660 Million Liquidated
Data from CoinGlass reveals that nearly $660 million worth of futures contracts have been liquidated within the last day.
“Liquidation” refers to the forced closure of a contract when it incurs losses equal to a specific percentage of the position.
Long Positions Hit Hardest
The majority of the liquidations, amounting to $568 million or 86% of the total, affected long positions. This imbalance occurred due to the significant drawdown in the sector following Bitcoin’s crash.
In the past twelve hours alone, approximately $613 million of liquidations occurred, coinciding with high market volatility.
Bitcoin Dominates Liquidations
Bitcoin-related contracts accounted for around $148 million of the total liquidations. However, Ethereum and Solana also contributed significantly, with $111 million and $34 million in liquidations, respectively.
Mass Liquidation Events Common in Crypto Sector
Large-scale liquidation events like this are not uncommon in the cryptocurrency sector due to high coin volatility and widespread leverage availability on exchanges.
Rise in Derivatives Interest
The interest in cryptocurrency derivatives has recently grown, especially highlighted by CryptoQuant Netherlands community manager Maartunn. The graph provided shows that Bitcoin futures volume has consistently exceeded spot volume, particularly during the second half of 2023.
Bitcoin Price Recovery
Bitcoin has experienced some recovery following its initial crash and is now trading around $42,700.
Hot Take: Cryptocurrency Futures Market Faces Significant Liquidation Event
Data shows that the cryptocurrency futures market has undergone a mass liquidation event, resulting in approximately $659 million in liquidated contracts. Long positions were hit the hardest, accounting for 86% of the total liquidations. Bitcoin, Ethereum, and Solana were the primary contributors to these liquidations. These mass liquidation events are not uncommon in the crypto sector due to high volatility and accessible leverage. The interest in cryptocurrency derivatives has been on the rise, as seen through increasing Bitcoin futures volume compared to spot volume. Despite the crash, Bitcoin has shown signs of recovery and is currently trading around $42,700.
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