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Long traders bear brunt as Bitcoin, Ether slide spurs $220m in liquidations

Kraken's settlement with the U.S. Securities and Exchange Commission over its liquid staking platform spurred a market decline, with the impact felt most by futures traders betting on further growth.

Long trades, or bets on higher prices, took 90% of the $220 million in liquidations on crypto futures trading over the past 24 hours as bitcoin (BTC) and ether (ETH) fell nearly 5%. Bitcoin and ether futures cumulatively saw $100 million in liquidations, while futures tracking dogecoin (DOGE), solana (SOL), XRP (XRP) and aptos (APT) took on $4 million in liquidations apiece.

That's the highest level of liquidations since last November for long traders, or those who hold the security directly. Crypto exchange Binance took over $95 million in liquidations, the most among counterparties, with OKX seeing $47 million.

Liquidations occur when an exchange forcefully closes a trader’s leveraged position owing 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, that is when they don't have sufficient funds to keep the trade open.

Liquidations data is beneficial for traders as it serves as a signal of leverage being effectively washed out from popular futures products – acting as a short-term indication of a decline in price volatility.

Kraken agreed to “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities.

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CoinDesk Analysis Team

CoinDesk is the media platform for the next generation of investors exploring how cryptocurrencies and digital assets are contributing to the evolution of the global financial system.

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