Data shows that there has been a large amount of liquidation in the cryptocurrency futures market today following bitcoin‘s sharp rise towards $37,000.
crypto Futures Market Recorded Massive Liquidations Over the Last Day
A futures contract is said to be “settled” when the derivatives exchange on which it is open forcibly closes it because the position accumulates losses of a specific degree (the exact percentage may vary from platform to platform).
There are two factors that can significantly increase the risk of a contract settling. The first and most obvious is the volatility of the asset with which the contract is opened. A large number of price fluctuations naturally means that it is more difficult to bet in a specific direction.
The other factor is the leverage that the user has opted for. “Leverage” here refers to a loan amount that anyone can choose to take against her initial position. This amount, which can be many times higher than the initial position, means that the profits obtained are much greater, but it also means that the losses are also amplified.
In the cryptocurrency sector, currencies are generally quite volatile and large amounts of leverage can be accessed. Therefore, speculators who decide to let it go may carry significant risk.
For this reason, it has not been uncommon for a large number of liquidations to occur at once when bitcoin and other assets have shown strong price action.
As sector currencies experienced volatility again over the past day, liquidations have piled up once again on exchanges.
The following data of glass coin shows what this futures flow has looked like so far:
<img decoding="async" class="alignnone wp-image-263759 size-full aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Bitcoin-surge-to-37000-dumps-134-million-in-shorts.png" alt="bitcoin Settlements” width=”560″ height=”256″ data-recalc-dims=”1″/>
The cryptocurrency futures liquidation data for the last 24 hours | Source: CoinGlass
In the last 24 hours, the cryptocurrency futures market has recorded liquidations worth almost $200 million. Of these, more than $160 million came from short contracts (equivalent to approximately 81% of the total market).
Most of this flow ($141 million) occurred in the last 12 hours alone, due to the fact that bitcoin‘s value was most volatile within this window.
As is often the case, btc futures contracts have contributed the most to this sell-off event, as the table below shows.
<img loading="lazy" decoding="async" class="alignnone size-medium wp-image-263766 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/1699546366_448_Bitcoin-surge-to-37000-dumps-134-million-in-shorts.png" alt="bitcoin and others” width=”640″ height=”292″ srcset=”https://bitcoinist.com/wp-content/uploads/2023/11/table-1.png?w=788 788w, https://technicalterrence.com/wp-content/uploads/2023/11/1699546366_448_Bitcoin-surge-to-37000-dumps-134-million-in-shorts.png 640w, https://bitcoinist.com/wp-content/uploads/2023/11/table-1.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2023/11/table-1.png?w=750 750w” sizes=”(max-width: 640px) 100vw, 640px” data-recalc-dims=”1″/>
The breakdown of the liquidations by symbol | Source: CoinGlass
Although, even so, the distance that bitcoin has over ethereum, the second classified cryptocurrency, is this time greater than usual. The $53 million difference in liquidations is likely due to btc seeing a steeper rise than eth within this period (4.3% vs. 1.5%).
Among altcoins (excluding ethereum), the Solana futures market took the biggest hit at nearly $6 million. SOL has been outperforming the market recently and only continued its streak in the last day with an increase of over 10%.
bitcoin price
With its latest rally, bitcoin finally took off from the $35,000 level that had been acting as a major source of resistance for the coin. The asset is now knocking on the door of $37,000 for the first time since early May 2022.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/H4BUUvWP/" alt="bitcoin price chart” width=”1534″ height=”869″/>
Looks like the value of the coin has shot up recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, chart from TradingView.com
