Over $700 million was liquidated on short trades, or wagers against price increases, in the cryptocurrency markets, hitting levels last seen in July 2021.
The price spike of various tokens over the previous 24 hours suggests that the liquidations may have led to a short squeeze. In the face of recent market volatility, longs—traders who anticipated higher prices—saw additional $100 million in liquidations.
A total of $936.24 million was secured in short #liquidations on the popular cryptocurrency exchange #FTX, marking the largest ever since its emergence.
via @ComposableDhttps://t.co/A5dux6yCLD
— CryptoSlate (@CryptoSlate) October 26, 2022
What Cryptocurrencies Had The Most Liquidation
The largest cryptocurrency, Ether (ETH), increased 10%, followed by bitcoin (BTC), Cardano’s ADA, Solana’s SOL, and dogecoin (DOGE), which increased 9% and 4.3%, respectively. The total market value of the cryptocurrency market rose by 4%, surpassing $1 trillion once more, a figure last reached in August.
In the last 24 hours, over 1 billion have been liquidated in total.#Liquidation #shorts #BTC #Bitcoin #btc #liquidations #Kryptomarkt #Crypto pic.twitter.com/TCCQB8hCQM
— $CryptoELRene$ (@CryptoELRene) October 26, 2022
What is Liquidation?
A liquidation occurs when an exchange forcefully closes out a trader’s leveraged position as a result of a partial or total loss of the trader’s initial margin. When a trader is unable to fulfil the margin requirements for a leveraged position, it occurs (fails to have sufficient funds to keep the trade open).
The largest short liquidations were reported by cryptocurrency exchange FTX ($519 million), followed by OKX ($71 million), and Binance ($46 million). Many users of Crypto Twitter thought the action was remarkable.
Liquidation in Bitcoin-Tracked Futures
Liquidations of long and short positions in bitcoin-tracked futures totaled $368 million, with ether futures coming in second with $356 million. ADA futures suffered losses for traders of $16 million among the other majors.
The number of outstanding derivative contracts that have not yet been settled, or open interest, climbed by 6.6%, indicating that traders added to their holdings in expectation of a further price increase.
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