The crypto market witnessed a tumultuous 24 hours between October 1 and 2, with a massive liquidation spike. About 85% of these liquidations were short positions, amounting to a liquidation of $97.73 million worth of shorts in just one day. This rapid move affected 29,510 traders, bringing the total liquidation value to $114.92 million. The main liquidation order was observed on Huobi with the BTC-USDT pair, worth $8.39 million.
Major exchanges such as OKX, Binance and Huobi were the epicenter of these liquidations. They recorded liquidation values of $36.21 million, $33.20 million and $27.79 million respectively. CoinEx in particular had a remarkable 97.94% of its liquidations in short positions. In contrast, other exchanges fluctuated between 72% and 96% on short liquidations.
| Exchanges | Liquidations | Long | Short | Rate (general) | Rate (short) |
|---|---|---|---|---|---|
| All | $114.56 million | $17.05 million | $97.51 million | 100% | 85.12% |
| OKX | $36.21 million | $6.52 million | $29.68 million | 31.61% | 81.99% |
| Binance | $33.20 million | $6.10 million | $27.11 million | 28.98% | 81.64% |
| Huobi | $27.79 million | $1.04 million | $26.75 million | 24.26% | 96.26% |
| Bite | $10.94 million | $2.98 million | $7.96 million | 9.55% | 72.79% |
| MuntEx | $4.88 million | $100.37K | $4.78 million | 4.26% | 97.94% |
| Bitmex | $593.91K | $100.82K | $493.10K | 0.52% | 83.02% |
| Bitfinex | $581.34K | $146.79K | $434.56K | 0.51% | 74.75% |
| Deribit | $367.16K | $68.72K | $298.43K | 0.32% | 81.28% |
Zooming in on individual cryptocurrencies, Bitcoin was at the forefront of the liquidation charts. Within the span of just four hours, Bitcoin saw long liquidations worth $381.54K and short liquidations reaching a significant $1.87 million. Ethereum wasn’t far behind, with its 24-hour shorts reaching a high of $4.12 million.
Liquidations involve the mandatory closing of a trader’s position when market conditions turn against their speculations, eroding the collateral they have posted. When trading assets, including cryptocurrencies, traders can take two main positions: ‘long’ or ‘short’. In a long position, traders essentially bet on an upward trajectory of an asset’s price. Conversely, a short position is taken with the expectation that the price of the asset will fall.
The mechanism of liquidation comes into play when the actual movement of the market contradicts a trader’s position. For example, if the market price rises when a trader is short, or falls when long, the position is liquidated to prevent further losses. This ensures that the trader’s losses do not exceed the initial margin or collateral. The dominance of short liquidations over the past 24 hours indicates that many traders had bet on a decline in Bitcoin’s price, only to be surprised by the climb to $28,000.
The rise in the price of Bitcoin can be attributed to several factors. After consolidating below $27,000 for more than a month, Bitcoin broke through the interim resistance and targeted the $28,000 mark. Increased volatility and historical data pointing to bullish trends for Bitcoin in October and November have fueled optimism. Ongoing volatility is expected to remain high, potentially driving the price higher.
Another crucial metric in this story is the realized price. Bitcoin has now surpassed the realized price for short-term holders, which was set at $27,850 on October 1. When the price of Bitcoin exceeds the short-term cost basis for the holder, the likelihood of these holders selling their assets to make a profit escalates.
Data from Glassnode reinforces this, showing that the supply of short-term profits has skyrocketed between October 30 and October 1, with around 331,450 BTC held by long-term holders currently making profits.
Bitcoin’s recent liquidations and price movement indicate bullish momentum. The market is witnessing a shift in sentiment, with traders becoming increasingly optimistic. However, it is important to note that an increase in unrealized gains in the market is a barrier to Bitcoin’s further growth. With an increasing number of market participants now sitting on unrealized gains, expectations of further volatility may prompt them to sell their positions, causing prices to fall.
The post Bitcoin’s Rise to $28,000 Leads to $114 Million in Liquidations in 24 Hours first appeared on CryptoSlate.