The cryptocurrency market experienced a significant shake-up early Monday as a crypto-tracked index shifted towards “fear,” following Ether’s worst single-day drop since May 2021. Cryptocurrency futures witnessed over $1 billion in liquidations within just 24 hours during a market sell-off. Out of this total, Ether futures accounted for $304 million.
During this period, over 200,000 traders found themselves liquidated; the single largest liquidation order was noted on Huobi, valued at $27 million. Both Bitcoin and Ether suffered as rates fell, with Ether enduring its sharpest one-day plunge since May 2021. Concurrently, the crypto fear and greed index reflected widespread “fear” in the market.
Increasing market sell-offs on Sunday resulted in over $1 billion in liquidations for crypto-tracked futures. A stronger Japanese yen and speculation surrounding market maker Jump Trading’s crypto business liquidation exacerbated the impact. Regarding liquidated bets, data indicates that Ether tracked futures witnessed $340 million and Bitcoin futures saw losses amounting to $420 million. Additionally, futures tracking SOL, DOGE, XRP, and PEPE experienced $75 million in total liquidations.
The situation led to over 275,000 individual traders getting liquidated, with the single highest liquidation order occurring on the crypto exchange Huobi— a BTC/USD trade worth $27 million. Almost 87% of impacted traders were long traders, those banking on increased prices.
The liquidations occurred as Bitcoin slumped more than 11% within a 24-hour window, while Ether plunged a staggering 25% before slightly rebounding. According to TradingView data, this marks ETH’s most significant one-day price descent since May 2021, where rates fell from over $3,500 to $1,700. Simultaneously, the crypto fear and greed sentiment index plummeted to its lowest level since early July.
Liquidations are the result of an exchange mandatorily closing a trader’s leveraged position due to the partial or total loss of the trader’s initial margin. It transpires when a trader is unable to satisfy the margin requirements for the leveraged position and lacks sufficient funds to keep the trade open.
The cryptocurrency market started its downward trend last week due to escalating geopolitical tensions in the Middle East and unimpressive earnings reports by tech firms. These factors quelled investor excitement, triggering a flight from risky assets.