Monday’s trading session saw crypto futures traders lose more than $500 million in liquidation positions as sharp volatility affected highly leveraged buy and sell trades, with some major currencies falling by as much as 12%.
Bitcoin (btc) The data showed a sharp drop from $43,000 to $40,300, leading to declines across major tokens like Chainlink. (connection)And Cardano’s ADA and Solana’s SOL, which fell more than 8% before recovering slightly.
Nearly $475 million in longs, or bets on higher prices, and $73 million in shorts, or bets against, recorded losses amid a general unwinding of leveraged bets as high funding rates set the stage for a fragile market environment.
The data shows that most liquidations took place on OKX at $190 million, followed by Binance at $148 million and Huobi at around $60 million.
The largest single liquidation order occurred on Bitmex, a chain link (connection) Futures position worth over $33 million.
Liquidations occur when an exchange forcibly closes a leveraged trader’s position due to partial or total loss of the trader’s initial margin. This occurs when a trader cannot meet the margin requirements for a leveraged trade, i.e. when he or she does not have enough funds to keep the trade open.
Meanwhile, some market watchers told CoinDesk that Bitcoin’s recent rally was supported by strong fundamentals — factors that have propelled it into an era “like nothing seen before.”
“Momentum has been steadily building in the Bitcoin creation space all year, and we are now seeing the markets reflect excitement around the increased activity,” Muneed Ali, founder of Bitcoin development company Trust Machines, said in an email to CoinDesk. “Given the emergence of Ordinals and Bitcoin L2s, there are reasons to be optimistic about the Bitcoin ecosystem. We are entering an era of Bitcoin that we have never seen before.
“I expect interest in Bitcoin to increase a lot in 2024 with potential ETF approvals, the halving event, and an influx of new developers,” Ali added.
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”