Data shows that bitcoin‘s rally above the $28,400 level has sparked $110 million in liquidations across the cryptocurrency futures market.
bitcoin Rally Leads to Mass Liquidation Event in Futures Market
Over the past day, bitcoin has been rising rapidly as its price has risen from the $27,000 mark to above the $28,000 level. This is the first time in about a month and a half that the cryptocurrency has surpassed this level.
The following chart shows how the value of the asset has changed in recent days.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-surge-to-28400-triggers-110M-surge-in-crypto-futures" alt="bitcoin price chart” width=”1534″ height=”877″/>
The value of the coin seems to have shot up since yesterday | Source: BTCUSD on TradingView
The chart shows that earlier in the day, btc had managed to reach $28,500. Since then, the coin has seen a pullback but has managed to stay above $28,000.
As is usual, the rest of the top assets in the sector have also followed in the footsteps of the original cryptocurrency and have observed their own rallies.
Generally, when the market suffers volatility as marked as the current one, chaos ensues in the futures sector. And in fact, as data from glass coin I would confirm, there have been a lot of liquidations in the last day.
<img decoding="async" class="alignnone size-full wp-image-257976 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-surge-to-28400-triggers-110M-surge-in-crypto-futures.png" alt="bitcoin and Cryptocurrency Settlements” width=”559″ height=”259″/>
The amount of liquidations that have occurred in the crypto sector over the past day | Source: CoinGlass
As the table above shows, the cryptocurrency futures market has recorded liquidations of around $134 million in the last 24 hours. As most of the price action in this period has been bullish, it is not surprising that the majority of this flow (nearly $93 million) involved holders of short contracts.
Only a third of these liquidations occurred in the last twelve hours, another development that is not unexpected since most of the volatility was in the previous twelve hour period.
In terms of the individual contributions to the settlements of the different symbols, this is what the distribution for the last day looks like:
<img decoding="async" loading="lazy" class="alignnone size-medium wp-image-257982 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/1696334799_485_Bitcoin-surge-to-28400-triggers-110M-surge-in-crypto-futures.png" alt="bitcoin and other assets” width=”640″ height=”294″ srcset=”https://technicalterrence.com/wp-content/uploads/2023/10/1696334799_485_Bitcoin-surge-to-28400-triggers-110M-surge-in-crypto-futures.png 640w, https://bitcoinist.com/wp-content/uploads/2023/10/data-768×353.png 768w, https://bitcoinist.com/wp-content/uploads/2023/10/data-750×345.png 750w, https://bitcoinist.com/wp-content/uploads/2023/10/data.png 787w” sizes=”(max-width: 640px) 100vw, 640px”/>
Looks like btc tops the liquidation charts | Source: CoinGlass
Naturally, bitcoin was responsible for the largest proportion of liquidations, with around $56 million in discarded contracts, while ethereum came in second with around $36 million.
Solana and Chainlink had the largest share among the rest of the sector, although at around $5 million and $3 million, respectively, their liquidations pale in comparison to the top two assets.
SOL and LINK’s extraordinary share may be due to the fact that their recent strong rallies would have put more attention on them, leading to more positions being opened in the futures market.
Mass liquidation events like today’s (popularly called “squeezes”) are not a particularly uncommon occurrence in the cryptocurrency sector due to the nature of the market.
Most currencies can exhibit quite a bit of volatility, and an absurd amount of leverage is easily accessible on most platforms, making the futures market a dangerous place for the uninformed trader.
Featured image by Kanchanara on Unsplash.com, chart by TradingView.com
