Cryptocurrency traders endured a rude awakening over the past 24 hours as Bitcoin price gyrations resulted in over $190 million in liquidations. According to data aggregator Coinglass, excessive volatility caught more than 81,000 traders off guard to trigger the cascading liquidations.
Keypoints
- Over $190 million in crypto trader liquidations recorded in one day amid Bitcoin price volatility
- Over 81,000 traders liquidated, majority were longs betting on continued BTC price rise
- Bitcoin and Ethereum led liquidation volumes, but ORDI entered top 3 with $21M liquidated
- Long traders continue suffering amid volatility, making up 91% of recent liquidations
- If volatility persists, liquidation volumes likely to keep rising – Binance and OKX saw most
The forced unwinding of futures positions began as Bitcoin pulled back to the $43,600 level, then rapidly rebounded toward $44,000. The fakeout shakeout saw longs betting on continued upside get stopped out, while shorts were also captured on the swift bounce.
Coinglass recorded 73.74% of total liquidations stemming from long traders, indicating approximately 45,000 buyers were prematurely stopped out. The largest single liquidation event topped $2.12 million on the OKX exchange across an ETH-denominated swap product.
While Bitcoin and Ethereum unsurprisingly led liquidation volumes with $47.12 million and $29.16 million respectively, altcoin ORDI unexpectedly grabbed third spot. ORDI saw $21.64 million worth of futures positions forcibly closed in response to its price volatility.
The recent crypto bloodletting illustrates the mounting risks confronting leveraged traders during periods of elevated uncertainty. Exchanges allow futures traders to use leverage to open larger positions than afforded by their capital alone. But leverage magnifies both profits and losses – turning rapid price moves into margin calls.
For example, 20x leverage enables a $10,000 position controlling $200,000 in crypto value. But a still-minor 5% adverse swing would wipe out the trader’s capital and trigger liquidation. And with the majority of liquidations coming from long traders, those betting on further upside continue getting punished amid Bitcoin’s two-steps-forward, one-step-back volatility.
In fact, the selloff’s second act in the past four hours induced another $47.83 million in liquidations – 91.05% stemming from beleaguered longs. The same top coins saw traders thrown to the wolves according to Coinglass, with ORDI retaining its unlikely spot among the leaders.
Between dominant exchanges Binance and OKX, traders registered $82.56 million and $60.51 million worth of liquidations respectively in the last day. Platform ByBit came in third over the period, notching $27.05 million in forced unwinding.
With Bitcoin struggling to keep its head above $43,000 support, the liquidation volumes show little sign of abating presently. With sentiment indicators flashing greed still and volatility elevated, traders employing excessive leverage risk getting swept up in the undertow.
The past day crystallizes the razor’s edge leverage traders navigate when crypto assets start swinging aggressively.
One mistimed bet can quickly cascade into millions in evaporated positions when measured in aggregate across exchanges. For vulnerable longs fixated on Bitcoin’s recovery, the lesson strikes again – irrational exuberance inevitably exacts its toll.
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