Data shows over $333 million cryptocurrency futures shorts have found liquidation in the past day after Bitcoin registered a plunge towards $42,000.
Cryptocurrency Market Sees Long Squeeze Following Bitcoin Plunge
Bitcoin and the cryptocurrency sector as a whole have gone through some sharp volatility in the past day and as is usually the case, this volatility has accompanied with it some shakeup for the futures side of the market.
As data from CoinGlass below shows, the sector has observed over $389 million in total liquidations over the past 24 hours.
The data for the cryptocurrency futures liquidations over the last day | Source: CoinGlass
“Liquidation” here naturally refers to the forced closure that any contract undergoes after it amasses losses of a specific degree (the exact value of which may be dependent on the derivative platform it’s open with).
The volatility inside this period has been towards the downside, with Bitcoin initially observing a drop to as low as $40,600 before bouncing back to the current $42,000 levels, so it’s not surprising that longs have taken the brunt of this liquidation squeeze.
The volatility that Bitcoin has observed during the past day | Source: BTCUSD on TradingView
These bullish investors have seen contracts worth $333 million flushed down the drain in this mass liquidation event, meaning that they have been responsible for more than 85% of the total market liquidations.
Earlier in the month, the shorts had been the ones who took the beating, as the Bitcoin price had rapidly rallied up, but with this plunge, the dynamic has reversed, with the bears emerging victorious.
In terms of individual contributions towards this liquidation squeeze by the various symbols, BTC unsurprisingly had the largest share, as the below table displays.
The breakdown of today's liquidations in terms of the symbols | Source: CoinGlass
Interestingly, Ethereum saw $82 million in liquidations, which isn’t far from Bitcoin’s $104 million. Usually, the gap is much larger, as BTC observes more interest from the traders.
ETH registering such high liquidations this time around may be a result of the fact that it has seen some uptrend recently, in a period where BTC had been consolidating sideways. This would have made speculators shift focus towards the number two cryptocurrency instead.
Binance & OKX Whales Lost In This Squeeze, While BitMEX Whales Showed Smart Behavior
An analyst has shared an interesting fact about this latest futures liquidation event in a CryptoQuant Quicktake post and it’s that the BitMEX whales have behaved differently from those on Binance and OKX.
The trend in the Bitcoin open interest on various exchanges | Source: CryptoQuant
Around when Bitcoin had broken through the $44,000 barrier, the BitMEX whales had closed up their long positions, something that’s reflected in the Open Interest data of the exchange. The “Open Interest” here refers to the total amount of positions (both long and short) currently open on the platform.
Unlike these smart whales, the ones on Binance and OKX continued to hold their positions, and so, when this latest Bitcoin plunge occurred, they got struck with liquidation, as the quant has highlighted in the chart.
