As a seasoned crypto investor with battle scars from numerous market cycles, I’ve learned to navigate through the tumultuous waters of derivatives liquidations. The recent $223 million flush in the cryptocurrency derivatives market is yet another reminder that this sector can be as unpredictable as a rollercoaster ride.
The data indicates that the cryptocurrency derivative market has experienced a significant number of forced closures (liquidations) due to the surge in the price of Bitcoin surpassing $71,000.
Crypto Derivatives Has Seen $223 Million In Liquidations During Last 24 Hours
Over the last 24 hours, there has been an accumulation of forced closures in the cryptocurrency derivatives market, as reported by CoinGlass. This term “liquidation” signifies the compulsory settlement of any open contract that has suffered losses exceeding a particular threshold (which may vary among platforms).
Two significant elements that might lead to a contract’s termination are market volatility and the degree of borrowing (leverage). In the world of cryptocurrency, investors frequently employ leverage, and the values of different coins can experience sudden price fluctuations quite often. As a result, mass liquidation events may occur regularly.
Over the past 24 hours, I’ve observed yet another bout of market volatility, leading to the expected surge in derivative settlements. Here’s a table detailing the key figures associated with the most recent liquidations:
It’s clear that during this timeframe, a combined total of $223 million worth of cryptocurrency derivative contracts have been liquidated. Interestingly, around $165 million of those liquidations were associated with short positions.
In simpler terms, about three-quarters of the recent market squeeze can be attributed to investors who are betting on a negative market trend, primarily due to the strong bullish momentum in the cryptocurrency sector, particularly Bitcoin’s surge past $71,000.
Regarding the specific cryptocurrencies involved in the recent significant event, it’s important to note that Bitcoin (BTC) and Ethereum (ETH), the two largest by market capitalization, have been instrumental. They accounted for a combined total of approximately $123 million in liquidations, with Bitcoin contributing about $85 million and Ethereum around $38 million.
Among other cryptocurrencies, Solana (SOL) and Dogecoin (DOGE) have witnessed the most significant sell-offs, with $16 million and $14 million in liquidated positions respectively. Despite Dogecoin’s market cap being only about a quarter of Solana’s, it has experienced a more substantial increase of 13%, which might account for its nearly equivalent liquidation amounts.
Yesterday, the whale experienced a significant liquidation squeeze, and there’s a chance that this sector may keep experiencing a purge, considering the direction of the market cap to open interest ratio.
In this context, “open interest” signifies the combined number of ongoing Bitcoin derivative contracts across all trading platforms. According to an analysis shared in a recent CryptoQuant Quicktake post, the proportion of Bitcoin’s market capitalization relative to its open interest has entered a potentially risky zone lately.
If the indicator shows a small value, it suggests that open interest is significantly larger than the market capitalization. This might indicate potential overheating within the market. Therefore, there’s a possibility that Bitcoin could experience more mass liquidation events soon, as a means to reduce the accumulated positions.
BTC Price
At the time of writing, Bitcoin is trading around $71,300, up more than 7% over the past week.
Read More
- LUNC PREDICTION. LUNC cryptocurrency
- BTC PREDICTION. BTC cryptocurrency
- XDC PREDICTION. XDC cryptocurrency
- APU PREDICTION. APU cryptocurrency
- USD GEL PREDICTION
- MNT PREDICTION. MNT cryptocurrency
- JST PREDICTION. JST cryptocurrency
- EUR CAD PREDICTION
- GLMR PREDICTION. GLMR cryptocurrency
- TAO PREDICTION. TAO cryptocurrency
2024-10-30 21:11