The cryptocurrency derivatives market has experienced a significant amount of liquidations in the wake of a crash that has affected altcoins. In the past day, the market has seen a high level of volatility, with many altcoins dropping by more than 5%. This widespread volatility has led to chaos in the derivatives market, with contracts worth nearly $429 million being liquidated in the last 24 hours.
When a contract is liquidated, it means that the platform on which it was opened has forcibly closed it due to accumulated losses reaching a certain threshold. Long contract holders have been particularly affected by these liquidations, with over $367 million worth of contracts being forcibly closed. This represents more than 85% of the total liquidations and indicates that many traders were betting on a bullish outcome for the market.
The reason for the high number of liquidations among long contract holders is the downward trajectory of the cryptocurrency market as a whole. This downward trend has led to a significant number of liquidations across various assets, as illustrated in a heatmap showing the distribution of liquidations by symbol. Interestingly, Ethereum, the second largest cryptocurrency by market cap, has seen the highest amount of liquidations at around $92 million. This is despite Bitcoin, the largest cryptocurrency, experiencing relatively stable prices during this period.
Other altcoins such as Dogecoin and Shiba Inu have also seen significant liquidations, with both coins experiencing sharp drops in value. These memecoins are known for their speculative nature, which may explain why they have seen higher levels of liquidations compared to other assets.
The recent mass liquidation event is commonly referred to as a “squeeze,” with long positions bearing the brunt of the liquidations. Squeezes are not uncommon in the cryptocurrency market due to its high volatility, but an altcoin-dominated squeeze of this scale is relatively rare.
Following the market crash, Ethereum has dropped to the $3,400 level. The price chart for Ethereum shows a clear downward trend, mirroring the overall market sentiment. Overall, the cryptocurrency market has experienced a period of heightened volatility and uncertainty, leading to widespread liquidations and market fluctuations.
In conclusion, the recent crash in the cryptocurrency market has had a significant impact on the derivatives market, with a large number of liquidations occurring in the past day. Long contract holders have been particularly affected by these liquidations, with Ethereum leading the way in terms of liquidation amounts. The market remains volatile, and traders should exercise caution when navigating these uncertain times.
