Altcoins
$367 million in crypto longs emptied
Data shows that the cryptocurrency derivatives market suffered a large number of liquidations over the past day following the crash that altcoins experienced.
Altcoin Longs Witness Squeeze, Ethereum Leads Liquidations
The past day has been a volatile period for the cryptocurrency market, with the majority of altcoins suffering declines of more than 5%. As is usually the case, this industry-wide volatility has led to chaos on the derivatives side.
According to data from CoinGlassthe derivatives market observed contracts worth almost $429 million. liquidation in the last 24 hours.
The data for the liquidation flush that has occurred over the past day | Source: CoinGlass
A contract is said to be “liquidated” when the platform it is opened with must forcefully close it after accumulating losses to a certain extent (the exact figure may differ between exchanges).
As the chart above shows, long contract holders experienced the vast majority of these forced closes over the past day. Specifically, approximately $367 million in liquidations, or more than 85% of the total, involved these traders betting on a bullish outcome for the market.
The reason for these lopsided liquidations naturally lies in the fact that cryptocurrencies as a whole have seen a strong downward trajectory over the period.
Below is a heat map that shows how individual assets have contributed to this latest wave of derivatives.
The distribution of the liquidations by symbol | Source: CoinGlass
Unlike what usually happens during these violent liquidation events, Bitcoin (BTC) is not topping the charts by this measure. Instead, Ethereum (ETH), the second-largest cryptocurrency based on market capitalization, comes out on top with around $92 million in liquidations.
This could be because Bitcoin has moved more or less sideways during this period, while Ethereum has seen a decline of over 3%. Interestingly, behind these two top coins are the memecoins Dogecoin (DOGE) and Shiba Inu (SHIB), with liquidations amounting to $60 million and $23 million, respectively.
These altcoins saw the biggest drops among the major cryptocurrencies, at around 11% each. This, combined with the fact that memecoins generally attract greater speculative activity, could explain why DOGE and SHIB are ahead of coins not called ETH or BTC.
Even so, the difference between Dogecoin and Bitcoin is currently only $10 million, which is impressive considering the difference in market capitalization between the two assets.
A mass liquidation event like this is commonly known as a “squeeze.” During these events, liquidations can rush in like a waterfall, causing even higher volatility in the market. As long positions have taken the vast majority of recent liquidations, the event would be characterized as “long press.”
Squeezes are not a rare occurrence in the cryptocurrency market, due to the generally high volatility of different coins, but a squeeze on a scale like this, dominated by the altcoin, is certainly not something that happens regularly.
ETH Price
Following this latest fall, Ethereum, the largest among altcoins, fell to the $3,400 level.
Looks like the price of the coin has gone down recently | Source: ETHUSD on TradingView
Featured image from Shutterstock.com, CoinGlass.com, chart from TradingView.com