Data
shows
a
mass
amount
of
short
contracts
have
seen
liquidation
in
crypto
derivatives
during
the
past
day
following
Bitcoin’s
rally
above
$66,000.
Bitcoin
Recovery
Has
Triggered
Large
Derivatives-Related
Liquidations
According
to
data
from
CoinGlass,
the
cryptocurrency
market
as
a
whole
has
observed
a
large
amount
of
liquidations
on
the
derivatives
side
over
the
last
24
hours.
“Liquidation”
here
naturally
refers
to
the
process
that
any
contract
undergoes
after
accumulating
losses
of
a
certain
degree,
where
its
platform
has
to
close
it
up
forcibly.
Below
is
a
table
that
shows
the
total
amount
of
liquidation
over
the
past
day.
Looks like a large amount of contracts have been flushed during this period | Source: CoinGlass
As
is
visible,
more
than
$135
million
in
cryptocurrency
derivatives
contracts
belonging
to
over
52,000
traders
were
liquidated
during
this
window.
This
derivatives
flush
has
disproportionately
affected
the
short
holders,
as
$93
million
of
their
contracts
were
caught
in
it.
In
more
concrete
terms,
68.4%
of
the
liquidations
involved
the
shorts.
This
is
natural
because
Bitcoin
and
other
assets
have
seen
green
returns
in
the
past
day.
More
than
$42
million
longs
still
managed
to
get
liquidated
despite
the
positive
performance,
suggesting
that
speculators
jumped
on
with
overleveraged
positions
when
the
surge
took
place.
Still,
they
arrived
too
late
and
found
liquidation
when
the
initial
leg-up
cooled
off.
As
is
usually
the
case,
Bitcoin-related
contracts
contributed
the
most
to
this
liquidation
event,
as
the
heatmap
below
suggests.
The breakdown of the liquidations by symbol | Source: CoinGlass
BTC’s
$47
million
liquidations
significantly
outweighed
Ethereum’s
this
time,
whose
$16
million
figure
is
more
similar
to
Solana’s
$12
million
share.
This
would
suggest
the
appetite
for
speculation
around
ETH
has
been
unusually
low
recently.
A
mass
liquidation
event
like
today’s
is
popularly
known
as
a
“squeeze.”
During
a
squeeze,
a
sharp
swing
in
the
price
triggers
a
large
number
of
liquidations,
which
only
feed
back
into
the
price
move,
thus
unleashing
a
cascade
of
liquidations.
The
shorts
saw
the
most
liquidations
the
past
day,
so
the
event
would
be
called
a
short
squeeze.
Historically,
such
large
liquidations
haven’t
exactly
been
rare
in
the
cryptocurrency
market.
This
is
because
most
coins
can
be
quite
volatile,
and
speculation
is
rife.
Overleveraged
positions
can
be
quite
risky
in
this
market,
so
it’s
not
surprising
that
when
volatility
like
today’s
emerges,
many
traders
get
caught
off
guard.
The
warning
signs
that
liquidations
would
pop
up
had
already
appeared
when
the
surge
began
yesterday,
as
the
Bitcoin
futures
Open
Interest,
a
measure
of
the
total
amount
of
open
positions,
had
shown
a
rise.
The value of the metric appears to have gone up over the past couple of days | Source: CoinGlass
The
chart
shows
that
Open
Interest
is
still
high
even
after
the
surge,
suggesting
that
the
squeeze
hasn’t
been
able
to
put
off
the
speculators.
BTC
Price
At
the
time
of
writing,
Bitcoin
is
trading
at
around
$66,000,
up
8%
over
the
past
seven
days.
The price of the coin seems to have shot up over the last day | Source: BTCUSD on TradingView
Featured
image
from
Shutterstock.com,
CoinGlass.com,
chart
from
TradingView.com
Go to Source
Author: Keshav Verma
