Data shows Ethereum liquidations reached over $31 million in the last 24 hours alone as the price of the crypto declines below $3.8k.
$31 Million In Ethereum Liquidates As Price Drops To $3.7k
Liquidation data for ETH reveals that there have been some heavy liquidations today as $15 million in futures has been liquidated in just the last four hours.
Before taking a look at the data, it would be best to first get a basic rundown on how the Ethereum futures market works, in case anyone is unaware about the concept of derivatives trading.
A futures product is one that allows traders to bet on the price of a commodity without actually having to hold said asset.
Related Reading | Why This Public Company Staked $50M In Ethereum On The Beacon Chain
It’s a fairly popular form of trading in the crypto world as it allows the possibility of making gains not only when the price moves up, but also when it moves down.
To participate, investors have to put forth some initial margin (which can be in Ethereum, fiat, or even another crypto), which acts as collateral. Traders can then make use of leverage, which is often multiple times bigger than the margin, to get higher gains.
However, if the bet fails and the price moves in the opposite direction, the trader can take significant losses simply because of the nature of leverage trading. When the initial margin is lost (totally or partially, depending on the exchange), the trading company forcefully closes the position. This is known as “liquidation.”
Now, here is some data about Ethereum Liquidations from the past day:
Looks like there were some heavy liquidations today | Source: coinglass.com
As you can see above, more than $15 million in ETH was liquidated in the past four hours alone, while double that was liquidated in the last twelve hours.
Related Reading | CME Ethereum Open Interest Hits 10% Of Future Market Milestone
In total, more than $45 million positions in ETH got liquidated in the past 24 hours.
ETH’s Price Drops Below $3.8k
Accompanying these liquidations was a drop in the value of the coin that has now taken it below the $3.8k price level.
At the time of writing, Ethereum’s price floats around $3.79k, down 6% in the last seven days. Over the past month, the crypto has lost 12% in value.
The below chart shows the trend in the price of the crypto over the last five days:
ETH's price has been volatile in the last few days | Source: ETHUSD on TradingView
Ethereum has mostly moved sideways recently, and till now there hasn’t been any signs of recovery. It’s unclear at the moment when the crypto might break out of consolidation, or which direction it may escape in.
Featured image from Unsplash.com, chart from TradingView.com