As a seasoned researcher with years of experience in the turbulent world of cryptocurrencies, I must say that this latest surge and subsequent liquidation event has once again reminded me why I find this sector so fascinating. The unpredictable nature of Bitcoin and its counterparts is a rollercoaster ride that few other markets can match.
The available data indicates that the entire cryptocurrency market, due to recent price fluctuations in Bitcoin and other digital currencies, has experienced a significant number of sell-offs or liquidations.
Bitcoin Has Recovered Back Above The $63,000 Level
As a researcher, I’ve observed an intriguing development following the announcement of the U.S. Federal Reserve reducing interest rates. The digital currency, Bitcoin, seems to have reacted favorably, surpassing the $63,000 mark in its price.
The chart below shows what the asset’s recent performance has looked like.
Over the past 24 hours, there’s been a 5% increase in the cryptocurrency, and it’s now nearing the peak level reached in August.
In similar fashion, other digital assets have experienced growth alongside the recent Bitcoin rally. Remarkably, coins such as Solana (SOL) and Avalanche (AVAX) have surpassed Bitcoin’s performance in this surge.
The unpredictability in the market has led to turmoil on the derivatives front.
Crypto Derivatives Market Has Observed $201 Million In Liquidations Today
Based on information from CoinGlass, there has been a significant number of forced closures in the cryptocurrency futures market over the past day. “Forced closure” means any active contract is automatically terminated when it experiences a specific level of loss.
Here is a table that breaks down the data related to liquidations in the sector over the past day:
Over the past day, a total of approximately $201 million worth of cryptocurrencies have been liquidated across the market. It’s important to note that around $147 million of this amount was due to short positions being closed.
In simpler terms, it can be said that short investors accounted for nearly 75% of all the sell-offs. This is logical given the substantial increase in value experienced by Bitcoin and similar assets during this specific time frame.
Today’s significant selling-off incident is often referred to as a “squeeze.” Given that this recent squeeze primarily involves the short sellers, it can more accurately be termed a “short covering squeeze” or simply a “short squeeze.
Such incidents are not uncommon in the crypto world since most digital currencies tend to be highly volatile and speculation runs high. Moreover, when combined with the fact that many speculators aren’t hesitant to use leverage, significant liquidations often take place quite effortlessly.
The heat map below demonstrates how each symbol contributed to the recent event we’re discussing.
Typically, Bitcoin leads the pack with a whopping $78 million in liquidations, nearly double the $36 million recorded by Ethereum in second position. Notably, Solana recorded the highest liquidations among the remaining contenders at approximately $11 million.
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2024-09-20 04:34