Crypto Markets See Largest Short Liquidations in 15 Months; Ether Leads Token Surge
Crypto exchange FTX saw some $500 million in liquidations alone, a larger-than-usual figure.
Crypto markets had over $700 million in liquidations on short trades, or bets against price rises, reaching levels not seen since July 2021.
The liquidations may have contributed to a short squeeze because prices of several tokens jumped in the past 24 hours. Longs, or traders betting on higher prices, saw an additional $100 million in liquidations amid short-term price volatility.
Ether (ETH) jumped 10% to lead the surge among major cryptocurrencies, with Cardano's ADA, Solana's SOL and dogecoin (DOGE) adding some 9% and bitcoin (BTC) adding a tamer 4.3%. The overall market capitalization of the crypto market increased 4% regaining the $1 trillion mark, a level previously seen in August.
Liquidations occur when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader cannot meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).
Crypto exchange FTX recorded over $519 million in short liquidations, the most among its counterparts, followed by OKX at $71 million and Binance at $46 million. Some on Crypto Twitter remarked the move was unusual.
Bitcoin-tracked futures saw some $368 million in both long and short liquidations, followed by ether futures at $356 million. Among the other majors, ADA futures had $16 million in losses for traders.
Meanwhile, open interest, or the amount of outstanding derivative contracts that have not been settled, increased by 6.6%, implying traders opened more positions in anticipation of a further price surge.
The moves came amid a rise in broader equity markets. The tech-heavy Nasdaq ended Wednesday 2.25% higher and the S&P 500 added 1.63%. Asian markets rose on Thursday, with Japan’s Nikkei 225 increasing 0.90% and Hong Kong’s Hang Seng adding 0.63% since the open.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.