Bitrabo Editorial
Recent data indicates a surge in liquidations in the cryptocurrency derivatives market following a significant crash in the altcoin sector.
Altcoins Experience Squeeze, Ethereum Leads in Liquidations
The cryptocurrency market has undergone notable volatility in the past day, witnessing a drop of over 5% in the majority of altcoins. Consequently, this widespread volatility has triggered turmoil in the derivatives market.
According to insights from CoinGlass, nearly $429 million worth of contracts have been liquidated in the past 24 hours.
A liquidation occurs when a contract is forcibly closed by the platform due to accruing significant losses that surpass a predetermined threshold.
As illustrated in the data, the majority of these forceful closures primarily impacted long contract holders. Specifically, over $367 million in liquidations, accounting for more than 85% of the total, involved traders who had bet on a bullish market outcome.
The significant number of liquidations among long contracts can be attributed to the overall downward trend observed in the cryptocurrency market.
The following heatmap showcases the contributions of individual assets to the recent derivatives liquidations.
Interestingly, Ethereum (ETH) leads in terms of liquidations, followed by Dogecoin (DOGE) and Shiba Inu (SHIB). While Bitcoin (BTC) remained relatively steady, Ethereum witnessed a significant drop, resulting in substantial liquidations.
These altcoins, especially DOGE and SHIB, experienced notable declines, contributing to their significant liquidations compared to other top cryptocurrencies.
Such mass liquidation events are commonly referred to as “squeezes,” which can escalate volatility in the market. Given the dominance of long contract liquidations in this event, it can be described as a “long squeeze.”
While squeezes are not uncommon in the cryptocurrency market due to its inherent volatility, an altcoin-focused squeeze of this scale is relatively rare.
ETH Price
Post the recent plunge, Ethereum’s price has retreated to the $3,400 level.