Crypto futures markets experienced significant liquidations, totaling over $840 million, as Bitcoin and Ether prices nosedived. Ether futures alone accounted for $304 million in liquidations, with over 200,000 traders being affected. The largest individual liquidation order, amounting to $27 million, occurred on Huobi. This market sell-off was triggered by factors such as a stronger Japanese yen and rumors of Jump Trading liquidating its crypto business.
In terms of futures tracking other cryptocurrencies, Solana’s SOL, dogecoin (DOGE), xrp (XRP), and pepe (PEPE) saw cumulative liquidations amounting to $75 million. Among the impacted traders, around 87% were long traders who had bet on higher prices.
Bitcoin experienced an 11% decline over the past 24 hours, while Ether saw a more substantial drop of up to 25% before slightly recovering. This decline in Ether’s price marked its largest single-day fall since May 2021. It’s worth noting that the crypto fear and greed index reached its lowest level since early July, indicating the prevailing sentiment of fear among participants.
Liquidations occur when exchanges forcefully close leveraged positions after traders fail to meet margin requirements. In this case, traders did not have sufficient funds to maintain their leveraged positions.
The sell-off in the crypto markets began last week due to geopolitical tensions in the Middle East and disappointing earnings reports by tech firms, which caused investors to turn away from risky assets. Furthermore, the situation worsened as the Japanese yen surged to seven-month highs, leading to expectations of further rate hikes by the Bank of Japan and the unwinding of carry trades. This resulted in Tokyo’s Topix 100 index experiencing its largest drop since 2011.