Dogecoin (DOGE) bulls experienced a major setback as $60 million in long trades were liquidated, surpassing the liquidations seen in bitcoin (BTC) futures. This decline in value was part of a broader sell-off in the crypto market, contributing to a bearish sentiment in the industry.
In an unusual turn of events, DOGE futures performed worse than BTC futures, leading to the liquidation of $60 million in long trades. The price of DOGE dropped by over 10% before briefly recovering during Asian trading hours, alongside a sell-off in major cryptocurrencies. The broader crypto market, as measured by the CoinDesk 20 Index (CD20), also experienced a 3.4% decline within the past 24 hours.
While BTC long bets lost $47 million during this period, Ether (ETH) bullish bets suffered the most significant losses at $76 million. Traders attribute the overall losses of over $440 million to profit-taking and the strength of the dollar, which prompted investors to seek less risky assets.
According to Lucy Hu, a senior analyst at Metalpha, the recent pullback in the meme coin market can be attributed to the pressure faced by bitcoin prices. Additionally, the expectation of a rate cut by the Federal Reserve prompted investors to shift from risky assets to safer ones. As one of the largest meme coins in the market, DOGE is susceptible to such market changes.
Data from Coinanlyze indicates that nearly all DOGE liquidation activity in the past 24 hours came from long positions, with only $600,000 worth of shorts being liquidated. These figures represent the highest liquidations for DOGE futures since May 2021, with more than $44 million of them occurring on Huobi, a popular crypto exchange in Asia.
The open interest for DOGE futures has dropped by 16% to $600 million, while the long-short ratio for DOGE futures suggests that traders are positioning themselves for further declines, indicating a bearish sentiment.
Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to a loss that exceeds the initial margin. When a trader fails to meet the margin requirements, meaning they don’t have enough funds to keep a leveraged position open, liquidation is triggered.