What to know:
- Crypto-tracked futures recorded over $1 billion in liquidations in the past 24 hours as bitcoin briefly nosedived from a Thursday record high above $103,000.
- The data shows that some 89% of all traders affected on OKX (which recorded the highest liquidations) were long traders, or those that bet on higher prices.
As a seasoned analyst with years of experience in the turbulent world of cryptocurrencies, I’ve seen it all – from breathtaking highs to gut-wrenching lows, and everything in between. This latest rollercoaster ride is no exception.
In the last 24 hours, crypto-traded futures saw more than a billion dollars worth of positions being closed (liquidated) due to Bitcoin‘s sudden drop from its Thursday record high of approximately $103,000 to around $92,000 early Friday. This decline was primarily driven by traders taking profits off the table.
In simple terms, about $500 million worth of Bitcoin futures contracts were terminated, mainly due to positions where people had wagered on rising BTC prices ($420 million). The liquidation for Ethereum futures was less substantial at around $85 million.
Liquidation takes place when an exchange forcibly ends a trader’s leveraged deal because of insufficient funds due to either a partial or complete loss in the initial deposit. This occurs when a trader fails to maintain the necessary margin for their leveraged position, meaning they don’t have enough money to keep the trade active.
Approximately 156,000 individual traders experienced a closure of their positions, with the largest single liquidation order taking place on the OKX crypto exchange through a BTC/USD trade valued at $18 million. The information indicates that about 89% of the impacted traders were long traders, meaning they had wagered on prices increasing.
As an analyst, I’ve observed a substantial setback for the futures markets of Dogecoin (DOGE) and XRP, totaling approximately $50 million in losses. Following a robust multiweek surge in both tokens, prices have now taken a turn, erasing the gains that had pushed open interest on their respective futures to unprecedented heights just last month.
Open Interest, often abbreviated as OI, signifies the count of currently active or ongoing futures agreements at a specific moment. An increase in Open Interest is commonly interpreted as a flow of capital into these contracts.
The recent decline resulted in the crypto Fear & Greed Index shifting from “extreme greed” to just “greed.” This is its lowest point in over 30 days. This index monitors fluctuations, prices, and social media activity to determine if investors are showing fear (often a sign of market bottoms) or exhibiting greed (indicating potential market peaks).
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2024-12-06 10:39