Crypto Derivatives Market Hit with $279M in Liquidations Over Weekend

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As a researcher with a background in finance and experience in studying cryptocurrency markets, I find the recent turbulence in the crypto derivatives market both intriguing and concerning. The massive liquidation events, totaling over $450 million in losses for traders across various exchanges and digital assets, have significantly impacted the broader crypto ecosystem.

As a researcher studying the crypto derivatives market, I’ve uncovered some turbulent developments over the past weekend. This turbulence resulted in a substantial loss of approximately $279 million from leveraged positions. According to data obtained from blockchain analytics company CoinGlass, around 80,590 traders were impacted by this significant wipeout. The majority of these traders were using centralized exchanges, such as OKX, Binance, and Bybit.

As a researcher studying the impact of recent market events on different cryptocurrency exchanges, I discovered that during the storm, traders on OKX incurred significant losses amounting to approximately $78 million. In contrast, Binance and Bybit experienced relatively smaller setbacks with around $11 million and $2 million in losses, respectively. Notably, the largest single liquidation order was executed on OKX, involving a BTC-USDT-SWAP worth over $22.24 million.

Crypto Liquidations Strike Bitcoin Traders

Bitcoin (BTC), being the largest crypto asset by market capitalization, experienced significant losses during this market turbulence as indicated by CoinGlass data. Approximately $115 million in Bitcoin positions were liquidated. Those traders who had bet on Bitcoin’s price decrease faced substantial losses, amounting to over $66 million within a 24-hour period.

Contrarily, investors who wagered on Bitcoin’s price increase endured approximately $49 million in losses.

As a researcher studying the cryptocurrency market, I’ve observed that Ethereum (ETH), the second-largest digital asset by market capitalization, experienced significant liquidation events as well. Over fifty million dollars worth of Ethereum positions were terminated due to various market conditions. It’s noteworthy that long traders endured more substantial losses, amounting to nearly thirty-four million dollars, compared to the approximately seventeen million dollars incurred by short traders during this period.

Over the weekend, cryptocurrencies including Solana (SOL) and Notcoin (NOT) experienced collective liquidations totaling over $32 million. This data highlights the widespread selling pressure impacting various digital currencies.

Second Largest Liquidations in History

The current round of liquidations comes shortly after one of Bitcoin’s most significant liquidation episodes, which took place on July 5.

Based on information from CoinGecko, traders in Bitcoin derivative markets faced a significant liquidation event totaling $226 million, marking the largest such occurrence since the fall of FTX in November 2022. This sudden and substantial loss caused ripples throughout the crypto market, particularly affecting meme coins. On Friday alone, meme coins built on Ethereum’s layer-2 scaling solution, Base, saw a decrease of approximately 25.2% in market value.

As an analyst, I’ve reviewed the latest data from CoinGecko, and I noticed that some digital assets in the meme category experienced substantial declines in value. Specifically, Brett (BRETT), Toshi (TOSHI), Degen (DEGEN), Basenji (BENJI), and ChompCoin (CHOMP) saw losses ranging between 19% and 30%.

Possible Factors Causing Market Liquidations

During this period, the harsh treatment of the market can be linked to various causes. Some of these include intense margin trading, large-scale selling, significant price swings, and a chain reaction of stop-loss orders being triggered.

For approximately five weeks, the German government has been transferring its seized Bitcoins from various exchanges such as Coinbase and Kraken. The German authorities aim to sell around 50,000 Bitcoin units that were confiscated in January 2024 from a pirate website found to have violated their Copyright Act back in 2013. This clandestine process of disposing of the assets began in June. Meanwhile, Japanese exchange Mt. Gox, which suffered a massive hack in 2014 resulting in losses close to $460 million at the time ($9 billion currently), has started compensating its victims after a ten-year wait.

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2024-07-08 12:01