Wild Bitcoin, Ether Price Swings Spur $400M of Crypto Liquidations, the Most Since August

BTC and ETH both surged to milestone levels amid bitcoin ETF optimism, but some shorts and longs got badly burned.

AccessTimeIconNov 9, 2023 at 6:35 p.m. UTC
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Thursday's huge price swings in the two largest cryptocurrencies, bitcoin (BTC) and Ethereum's ether (ETH), prompted more than $400 million of open trades to get liquidated, the most since the August crash.

The wild session comes at a time when BTC and ETH prices have been surging amid Wall Street's burgeoning interest in crypto. Both cryptos surpassed round-number milestones they haven't seen recently. BTC topped $36,000 and then $37,000 for the first time since May 2022 – and almost reached $38,000 – before retracing much of the rally. ETH got above $2,000 and hit the highest level since the April Ethereum upgrade known as Shanghai.

Optimism over ETFs and the potential gusher of money they could lure into the industry fueled the move higher. On Wednesday, CoinDesk reported that Grayscale is in talks with two key Securities and Exchange Commission departments about the conversion of its bitcoin trust, known as GBTC, into an ETF.

And then on Thursday, it appeared that BlackRock registered a new corporate entity – called the "iShares Ethereum Trust" – in the U.S. state of Delaware, where many corporations set up shop. iShares is the name of BlackRock's ETF division. The filing was done by BlackRock Advisors, a division of the world's largest asset manager. (The company incorporated the iShares Bitcoin Trust in the state a week before it officially filed paperwork for a spot BTC ETF in June.)

BTC had been around $35,200 before the surge, and after the ETH news emerged, it started heading back toward that level, tanking to about $36,400.

The extraordinarily volatile period resulted in a massive leverage wipeout, liquidating $241 million of short positions and roughly $200 million of longs during the day for all crypto assets combined, CoinGlass data shows.

Crypto liquidations in a day (CoinGlass)
Crypto liquidations in a day (CoinGlass)

Liquidations mean that the exchange forcefully closes a leveraged trading position due to the partial or total loss of the trader's money down, or doesn't have enough funds to keep the trade open. The dynamic can exacerbate volatility as traders cover their positions and flushes out excessive leverage from the market.

Thursday saw the largest amount of liquidations in a day since Aug. 17, when cryptocurrencies sharply sold off with BTC dropping to as low as $25,000 from around $29,000, with liquidations totaling $1 billion.

Open interest, or OI, the total amount of open options and futures contracts held by market participants, for crypto derivatives plunged below $24 billion from over $26 billion, per Coinalyze data, as traders dismantled or were forced to close their leveraged positions.

"12% (-$3b) Total OI wipeout in a few mins on the anniversary of the FTX collapse," widely followed crypto trader Hsaka posted on X (formerly Twitter). "Poetic."

Edited by Nick Baker.

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Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.


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