Data shows a huge amount of liquidations have occurred on the crypto futures market today following Bitcoin’s sharp surge toward $37,000.
Crypto Futures Market Has Registered Mass Liquidations During Past Day
A futures contract is said to be “liquidated” when the derivative exchange with which it’s open forcefully closes it up due to the position amassing losses of a specific degree (the exact percentage could differ from platform to platform).
There are two factors that can significantly raise the risk of a contract undergoing liquidation. First and the most obvious one is the volatility of the asset with which the contract is open. A high amount of price fluctuations naturally means that it’s harder to bet in any specific direction.
The other factor is the leverage that the user has opted for. The “leverage” here refers to a loan amount anyone may choose to take against their initial position. This amount, which can be many times the initial position, leads to any profits incurred being multitudes more, but it also means that losses are also amplified.
In the cryptocurrency sector, the coins are generally quite volatile, and high amounts of leverage are accessible. The speculators choosing to let go can thus carry a significant risk.
Because of this reason, a mass amount of liquidations happening at once hasn’t been an uncommon occurrence when Bitcoin and other assets have shown sharp price action.
As the coins in the sector have gone through volatility again in the past day, liquidations have once more stacked up on the exchanges.
The below data from CoinGlass shows how this futures flush has looked like so far:
The cryptocurrency futures liquidation data for the last 24 hours | Source: CoinGlass
In the past 24 hours, the cryptocurrency futures market has registered liquidations amounting to almost $200 million. Out of these, more than $160 million came from short contracts (equivalent to about 81% of the market total).
The majority of this flush ($141 million) came within the last 12 hours alone, because of the fact that the value of Bitcoin was most volatile inside this window.
As is most often the case, BTC futures contracts have contributed the most towards this mass liquidation event, as the table below displays.
The breakdown of the liquidations by symbol | Source: CoinGlass
Though, even so, the distance that Bitcoin has on Ethereum, the second-ranked cryptocurrency, is more than usual this time. The $53 million difference in liquidations is likely down to BTC registering a sharper surge than ETH inside this period (4.3% vs 1.5%).
Among the altcoins (excluding Ethereum), the Solana futures market took the largest hit at almost $6 million. SOL has been outperforming the market recently and has only continued its run in the past day seeing a rise of more than 10%.
Bitcoin Price
With its latest rally, Bitcoin has finally lifted off 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 the start of May 2022.
Looks like the value of the coin has shot up recently | Source: BTCUSD on TradingView