As a seasoned crypto investor with battle-tested nerves and a knack for navigating market turbulence, I must admit that today’s events have been quite the rollercoaster ride. The sharp recovery of Bitcoin to the $66,000 level was indeed a sight to behold, reminding me once again of the unpredictable yet exhilarating nature of this space.
The data indicates that the market for crypto derivative products has experienced numerous liquidations because Bitcoin reached the price point of $66,000.
Bitcoin Has Now Recovered To The $66,000 Level
Yesterday proved to be an excellent day for Bitcoin investors, with the price experiencing a significant spike in value, reaching the $66,000 mark for the first time since the end of the previous month.
The below chart shows what the asset’s recent price action has been like.
The graph indicates that the recent 6% increase over the past day brings Bitcoin very close to exceeding its September peak. If it manages to break through this peak, the value of the asset will reach its highest point since July.
Generally speaking, Bitcoin (BTC) isn’t the only one experiencing a surge in this rally, as other coins such as Ethereum (ETH) and Solana (SOL) have actually surpassed it. In fact, Ethereum has seen an 8% increase, while Solana has experienced a 7% jump.
Given the market’s instability over the last 24 hours, it’s no wonder that there have been some changes on the derivatives front.
Crypto Derivatives Has Seen $233 Million In Liquidations Today
Based on information from CoinGlass, there have been numerous instances where positions in the cryptocurrency derivatives market were forcibly closed over the past 24 hours. These positions are referred to as being ‘liquidated’ when they surpass a specific level of loss and are consequently terminated by their respective platforms.
Here is a table that shows the relevant numbers related to the latest mass liquidation event:
It’s clear from what’s shown that approximately $233 million worth of derivatives agreements linked to all cryptocurrencies have been terminated during this period. This termination was largely composed of short contracts, meaning those who had bet on a downturn suffered losses amounting to about $198 million, which is nearly 85% of the total liquidations.
Regarding individual cryptocurrencies, Bitcoin has consistently led with nearly twice as many liquidations compared to Ethereum. However, despite holding the largest market share, Bitcoin only accounts for about 39% of the total market, suggesting that alternative coins (altcoins) have also experienced a reasonable amount of speculation in recent times.
Among other cryptocurrencies besides Bitcoin (BTC) and Ethereum (ETH), Solana (SOL) has witnessed the largest number of liquidations, totaling approximately $11 million. SUI and NEIRO follow closely with around $7 million and $5 million in contracts being liquidated each.
In simpler terms, an incident like the one we’re experiencing today is often referred to as a “squeeze.” Given that this recent event was primarily influenced by a large number of short positions, it is also called a “short covering rally” or simply a “short squeeze.
When there’s a squeeze (a sudden increase in demand or price), liquidation (selling assets to cover obligations) can actually reinforce the price movement, making it last longer. This prolonged period of selling triggers even more liquidations, leading to increased volatility due to the rapid succession of these events.
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2024-10-15 09:42