Crypto Liquidations Hit $138 Million: What Happened?

Recent data from Coinglass shows that the crypto market witnessed a staggering $138.57 million in liquidations over the past 24 hours, leaving market traders questioning the factors behind this major disruption.

Overview of liquidations

Crypto liquidations are the forced closing of leveraged positions on multiple crypto exchanges when the market moves against them. Simply put, when the value of a trader’s assets falls below a specific threshold, exchanges immediately sell those assets to pay losses, resulting in a liquidation event.

According to data from Coinglass, the 24-hour volume revealed total liquidations of $138.57 million, with $120.17 million accounting for long positions and $18.40 million for short positions.

Bitcoin (BTC) and Ethereum (ETH) bore the brunt of the liquidation wave, with Bitcoin leading the pack. Over the past day, Bitcoin recorded a total of $25.68 million in liquidations, with long traders losing $6.39 million and short traders facing losses of approximately $2.98 million. Ethereum recorded even steeper losses, experiencing a total liquidation amount of $37.06.

Currently, Bitcoin is trading at $40,722.72, down by 2.43%, while Ethereum has seen a 4.07% drop to $2,372.45 within the same time frame. Surprisingly, even the newly launched MANTA tokens released by MANTA Network, faced a mild liquidation of $1.95, highlighting the widespread impact of the market downturn.

Root causes and market analysis

The recent market turbulence has been linked to heightened volatility, influenced by various factors. Analysts point to the approval of multiple spot Bitcoin Exchange-Traded Funds (ETFs) by the SEC as a potential catalyst. In the 12 days following the approvals, Bitcoin lost over 7% of its value, dropping from above $48,000 to around $43,000.

On-chain analytics from Glassnode suggests that the price drop may have been driven by a combination of derivatives leverage and spot profit-taking. However, multiple measures in both the on-chain and derivatives domains indicate that a sizable proportion of Bitcoin investors viewed the ETF approval as a sell-the-news opportunity.

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