3 months ago
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The current wave of liquidations has sent shockwaves through the entire crypto community, with many traders reassessing their risk management strategies.
The ongoing crypto winter, which has impacted the entire market, has triggered massive liquidations across the industry, with both Bitcoin (BTC) and Ethereum (ETH) traders losing nearly $200 million.
According to data from blockchain analytics firm CoinGlass, Bitcoin which saw its prices drop by 5% on Monday, accounted for the lion’s share of the liquidations, with approximately $47 million in leveraged positions wiped out.
Ethereum, on the other hand also faced a total of $45 million in liquidations, making the two largest crypto assets in the industry the biggest contributors to the new wave of liquidations.
Market Decline and Its Impact
Both Bitcoin and Ethereum have been on a downward trajectory since the start of August, falling below their previous monthly highs by 11% and 20%, respectively.
Since then, leveraged traders have been bearing the brunt of the market decline. On August 5, the crypto market suffered a massive liquidation of more than $1 billion in a single day. This loss affected 270,259 traders, with one victim losing $22 million of their assets to the bears.
Another victim also lost over $5 million of his investments when the positions were forcefully closed due to the price decline.
The trend has continued this week. On Monday, CoinGlass data showed that 68,275 traders were affected by the latest tranche of liquidations. These traders had placed bets on the potential price performance of major cryptocurrencies outside of BTC and ETH. Those who had opened leveraged positions on Ripple’s XRP suffered a combined loss of more than $3 million.
According to the data, long traders were hit hardest, losing $2.95 million, while short sellers recorded a more modest loss of just $355,000. In addition to XRP, Toncoin (TON), Celestia (TIA), and Sui (SUI) traders suffered combined losses of $21 million.
Liquidations across Exchanges
These liquidations occurred primarily on derivatives marketplaces, where traders had taken on leveraged positions, betting on the continued rise or fall of different cryptocurrencies.
Exchanges like Binance lost approximately $74 million during this period of market volatility, while OKX and Huobi Global, now known as HTX, were hit with $55 million and $17 million in losses, respectively.
According to CoinGlass data, the largest single liquidation order occurred on OKX, where one user lost $2.17 million in a single trade involving the ETH/USD pair.
Market Sentiment and Future Outlook
The current wave of liquidations has sent shockwaves through the entire crypto community, with many traders reassessing their risk management strategies. The losses highlight the dangers of highly leveraged positions in a volatile market, where rapid price movements can lead to significant financial losses in a short period.
For the broader market, these liquidations could signal a period of increased caution among traders, particularly those using leverage. While some may view this as a buying opportunity, others may choose to stay on the sidelines until the market shows signs of stabilization.
