$300 million in futures liquidated within hours of crypto market crash on Binance and FTX
- Nearly 80% of long positions across derivatives exchanges were liquidated, posting over $300 million in losses.
- The crypto market suffered a bloodbath on December 27, 2021, triggering liquidation of over 109,000 traders’ positions.
- Bitcoin and Ethereum futures were hit the hardest, followed by Solana and Terra on Binance and FTX.
The crypto market crash on Monday triggered cascading liquidations in futures across derivatives exchanges. Assets with the highest market capitalization were hit the hardest in the bloodbath.
Altcoin futures suffer lower losses compared to Bitcoin and Ethereum
The crypto bloodbath on December 27, 2021 triggered $300 million in futures liquidations based on data from derivatives data-analytics platform Coinglass. A liquidation is triggered when there is a loss of a trader’s initial margin in a position.
Binance derivatives witnessed $119 million worth of liquidations. Over 109,000 positions were liquidated as Bitcoin price tumbled below $52,000.
Historically, mass liquidation of futures contracts is indicative of a bear market in the underlying asset.
Bitcoin futures worth $94 million were liquidated following the price drop. Of the total liquidations, 80% occurred in long positions, representing traders betting on a price rally in Bitcoin.
Liquidated futures contracts of layer-1 projects Solana and Terra accounted for $9 million.
@lightcrypto, a cryptocurrency analyst believes that exchanges with a high concentration of retail traders suffer cascading liquidations.
moved up from consolidation into key level with little hinderance, but exchanges with high concentrations of retail continue to rage short strength while the SPX makes ATHs during a thin America session.
— light (@lightcrypto) December 27, 2021
This sets up a violent liquidation and stop-driven move next. pic.twitter.com/IfXmqF914V
@AltcoinSherpa, a pseudonymous cryptocurrency analyst, is of the opinion that Bitcoin revisits the lows following mass liquidation events. The recent Bitcoin futures liquidation could therefore be followed by further drop in price of the asset.
$BTC: The plan from the start has been to bid 43-44k. I am still waiting for a lower high before any new lows (and potentially no new lows at all). You see big liquidation wicks first and then price often revisits the lows. #Bitcoin pic.twitter.com/1gei5ZBzzO
— Altcoin Sherpa (@AltcoinSherpa) December 20, 2021
FXStreet analysts have predicted that Bitcoin price could retest key resistance at $50,000 and try to advance towards $53,000.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
