Monday’s Trading Session Spurs Over $500 Million in Crypto Futures Liquidations as Bitcoin and Ether Experience Steep Volatility
During Monday’s trading session, cryptocurrency futures traders faced significant losses, exceeding $500 million in liquidated positions due to the impact of steep volatility on highly leveraged long and short positions. Major cryptocurrencies, including Bitcoin (BTC), witnessed fluctuations from $43,000 to as low as $40,300, resulting in drops of up to 12%. This trend extended to other tokens like Chainlink (LINK), Cardano’s ADA, and Solana’s SOL, which experienced over an 8% decline before a partial recovery.
Riskier assets like Shiba Inu (SHIB) and Dogecoin (DOGE), both dog-themed meme tokens, fared slightly better with a 5% drop. Conversely, BNB Chain’s BNB, Avalanche’s AVAX, and Celestia’s TIA demonstrated strength with gains of up to 20%, remaining unaffected by Bitcoin’s weakness.
The market environment became shaky as high funding rates led to a general unwinding of leveraged bets, resulting in losses of nearly $475 million in long positions and $73 million in short positions.
Data revealed that most liquidations occurred on OKX, totaling $190 million, followed by Binance at $148 million and Huobi at nearly $60 million. The largest single liquidation order, valued at over $33 million, took place on Bitmex, involving a Chainlink (LINK) futures position.
Liquidations transpire when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the initial margin. This occurs when a trader cannot meet the margin requirements for a leveraged position, lacking sufficient funds to keep the trade open.
Despite the market turbulence, some market watchers assert that Bitcoin’s recent rally is supported by strong fundamentals, propelling it into a “never seen before” era. Muneed Ali, founder of Bitcoin development firm Trust Machines, expressed optimism about the increased activity in the Bitcoin builders space, anticipating a surge in interest in 2024 with potential ETF approvals, the halving event, and the influx of new developers.