The cryptocurrency derivatives market has experienced a significant amount of liquidations in the past day following a crash in altcoins. The volatility in the market has led to chaos in the derivatives sector, with contracts worth nearly $429 million liquidated in the last 24 hours. Long contract holders bore the brunt of these forceful closures, with over $367 million liquidated, reflecting more than 85% of the total liquidations. The downward trajectory of the cryptocurrency market as a whole has contributed to the high number of liquidations.
Ethereum has emerged as the leader in liquidations, surpassing Bitcoin, which has been relatively stable. Ethereum witnessed a drop of over 3%, leading to around $92 million in liquidations. Dogecoin and Shiba Inu, memecoins known for their speculative nature, also saw significant liquidations of $60 million and $23 million, respectively. These altcoins have experienced sharp declines of around 11% each, contributing to the high liquidation amounts.
The mass liquidation event, often referred to as a “squeeze,” can lead to cascading liquidations and increased volatility in the market. In this instance, the longs took the majority of the liquidations, resulting in a “long squeeze.” While squeezes are not uncommon in the cryptocurrency market due to its high volatility, an altcoin-dominated squeeze of this scale is not a regular occurrence. Ethereum, being the largest among the altcoins, has dropped to the $3,400 level following the recent plunge in prices.
Overall, the cryptocurrency derivatives market has been highly volatile in the past day, resulting in a significant amount of liquidations for long contract holders. Ethereum has led in liquidations, followed by Dogecoin and Shiba Inu, which have experienced substantial drops in price. The market remains unpredictable, and events like the recent squeeze serve as a reminder of the risks associated with trading in the cryptocurrency space. Traders must exercise caution and stay informed about market developments to navigate the ever-changing landscape of digital assets.
