Data shows the cryptocurrency derivatives market has faced a high amount of short liquidations following the rallies in Bitcoin and Ethereum.
Crypto Market Liquidations Have Crossed $535 MillionBelow is a table that shows the relevant numbers related to the latest liquidations in the cryptocurrency sector.
In total, the market as a whole has suffered nearly $547 million in liquidations over the past day. Out of these, $446 million in contracts involved were short positions. This means that investors betting on a bearish outcome made up for over 81% of the liquidations. The dominance of short liquidations is naturally down to the fact that Bitcoin and other assets have gone up during the past day.
When broken down in terms of the individual symbols, BTC-related contracts appear on top, with $229 million worth of them getting flushed inside this window.
A Mass liquidation event like today’s is popularly known as a squeeze. Since this squeeze involved bearish bets in the majority, it would be called a short squeeze. A property of a squeeze is that it involves a cascade of liquidations; an initial sharp swing in the price causes a market flush, which ends up feeding back into the price move, leading to further liquidations. As such, these events tend to be violent.
Liquidation squeezes aren’t exactly a rare sight in the cryptocurrency market, owing to the fact that coins can be volatile on a regular basis and positions tend to be overleveraged. Thus, while some positions have been flushed in the latest squeeze, it doesn’t mean that the risk of further liquidations has gone away.
Generally, a squeeze is more likely to affect the side of the market that’s more dominant. Since the Funding Rates currently point to that side being the bullish investors, it’s possible that they could end up getting wrapped in a squeeze, should more volatility emerge.
BTC PriceBitcoin pulled back to $70,500 on Monday, but the coin has kicked off Tuesday with a surge to $74,300.
