Data indicates that the cryptocurrency derivatives sector has suffered a lot of liquidations as Bitcoin rose to the $66,000 level.
Bitcoin has now recovered to the $66,000 level
Last day was a great time for Bitcoin investors as the price showed a sharp recovery spurt, taking it to the $66,000 level for the first time since the end of last month.
The chart below shows what the recent price movement of the asset has been like.
The chart shows that this 6% increase over the past 24 hours means that Bitcoin is now not too far away from surpassing its highest level since September. A break of this high would take the asset to its highest level since July.
As is usually the case, BTC was not alone in this rally, as the rest of the sector followed suit. Coins such as Ethereum (ETH) and Solana (SOL) have outperformed native digital assets, with jumps of 8% and 7%, respectively.
With all the volatility the market has witnessed over the past day, it is not surprising that the derivatives side has seen a shakeout.
Cryptocurrency derivatives saw $233 million worth of liquidations today
According to data from Queen GlassA large amount of liquidations have occurred in the cryptocurrency derivatives market over the past 24 hours. A contract is said to be “liquidated” when it is forcibly closed by its platform after it has exceeded losses by a certain degree.
Below is a table showing the relevant numbers related to the recent mass liquidation event:
Looks like the latest derivatives flush has been short-dominated | Source: CoinGlass
As shown above, approximately $233 million worth of derivatives contracts related to all cryptocurrencies were liquidated during this period. This flow was almost entirely short contracts, with those investors who bet on a bearish outcome receiving a loss of $198 million, equivalent to approximately 85% of the total liquidations.
In terms of individual tokens, Bitcoin is expected to come out on top, with nearly double the liquidations of second-placed Ethereum. Although Bitcoin’s share is the highest in the sector, it represents only 39% of the total, meaning that altcoins have enjoyed a fair share of their own speculation lately.
The distribution of the latest liquidations by symbol | Source: CoinGlass
Among assets other than BTC and ETH, Solana saw the largest amount of liquidation at approximately $11 million. SUI and NEIRO rounded out the top five with contracts worth $7 million and $5 million, respectively.
A mass liquidation event like today’s is called a “squeeze” and since this last event involves the dominance of short trades, it is known as a “short squeeze.”
During a squeeze, liquidations feed on the price movement they caused, thus prolonging it and unleashing a wave of more liquidations. That’s why these events tend to be so volatile.
Featured image by Dall-E, CoinGlass.com, chart from TradingView.com