Data shows that long-term cryptocurrency holders have seen liquidations of $365 million in the past day as the price of bitcoin has plummeted below $66,000.
crypto Derivatives Market Has Recorded High Liquidations Today
According to data from glass coinThe derivatives side of the cryptocurrency market has seen some major sell-offs in the last day following the volatility that assets like bitcoin have experienced.
The “liquidation” of a contract occurs when it accumulates losses of a certain degree, leading to the derivative exchange with whichever one is open to forcibly close it.
Below is a table showing the information about the liquidation event that occurred in the cryptocurrency sector during the last day:
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Looks like a large amount of liquidations have occurred during the past 24 hours | Source: CoinGlass
As can be seen above, the market has seen total liquidations of over $461 million in the last 24 hours. 144,049 traders participated in this wave, with the largest single liquidation amounting to more than $7 million.
It would appear that long-term investors have borne the brunt of this sell-off event, with $365 million worth of such contracts closing strongly. This would mean that almost 80% of the total liquidations involved these traders betting on a bullish outcome.
Price action in the sector as a whole has been negative over the past day, with bitcoin witnessing a drop of almost 6%. As such, it is not surprising to see liquidations drag on for a long time.
Mass liquidation events are popularly known as “squeezes.” Since the previous day's event was dominated by the long side of the sector, the squeeze would be classified as a “long squeeze.”
During a squeeze, a sharp price swing can lead to a large number of liquidations that only fuel the price movement. This amplified movement then provokes even more liquidations and, in this way, a cascade of them is unleashed.
Most of the latest waves have occurred in the last 12 hours alone, as settlements total $310 million for the period. This once again corresponds with the price action, as bitcoin and others have been the most volatile in this period.
As for how the various individual symbols are responsible for the squeeze, the following table breaks it down:
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The breakdown of the liquidations according to symbol | Source: CoinGlass
bitcoin was responsible for the largest share of liquidations with $137 million, while ethereum (eth) came in second with $100 million. Of the altcoins, Solana (SOL) and Dogecoin (DOGE) topped the list with around $15 million in liquidations each.
In the cryptocurrency sector, mass liquidation events like today's are not exactly an uncommon occurrence, due to the fact that currencies are generally quite volatile and many platforms offer easy access to extreme amounts of leverage.
Due to these factors, uninformed trading on the derivatives side of the cryptocurrency market can prove to be quite risky.
bitcoin price
bitcoin has plummeted to the $65,200 level with its latest drop.
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The price of the asset appears to have gone through some significant decline in the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, CoinGlass.com, chart from TradingView.com
