Ether Futures Lead $1.2B in Liquidations as Crypto Market Cap Goes Down Sixteen Percent Overnight
The past 24 hours were among the biggest crypto market drops in recent months. Ether futures led liquidation losses in the past 24 hours as crypto markets lost over sixteen percent (16%) of their overall capitalization, data from multiple sources show.
Liquidations in the crypto market occur when a trader has inadequate funds to pay for a margin call – or a call for additional collateral demanded by the exchange to keep the trading position funded. They’re especially common in high-risk trading because of the high volatility of assets. It happens in both margins and futures trading.
Traders of ether futures lost $333 million to liquidations as the asset lost twenty-two percent (22%) to drop under the $1,900 level. This was the highest among all cryptos, with bitcoin futures seeing $330 million in losses and futures tracking Terra’s LUNA racking up $130 million in losses.
Losses go beyond $1.2 billion in the past 24 hours, the highest so far this year. They came as major cryptocurrencies saw steep drops: Bitcoin fell eleven percent (11%), BNB Chain’s BNB lost twenty-six percent (26%), and Solana’s SOL lost 37%. Terra’s LUNA fell out of the top ten cryptos by market capitalization to the 81st rank – it fell ninety-six percent (96%) in the past 24 hours to under 40 cents.
Crypto exchange OKX saw $393 million in liquidations, the highest among all crypto exchanges, followed by Binance at $389 million and Bybit at $155 million.
Data shows eighty-three percent (83%) of all futures were long, or betting on higher prices, even though weakness in the overall market earlier this week. Much of the systemic risk arose from terraUSD (UST), a stablecoin issued by Terraform Labs, losing its peg with the U.S. dollar and causing a cascading effect on decentralized finance (DeFi) platforms running on Terra.
Contagion associated with UST likely spread over to the broader market alongside inflation fears and weak CPI data, fuelling a drop in crypto prices.
Meanwhile, data shows open interest – or the amount of unsettled futures contracts – fell 10% in the past 24 hours, implying traders removed liquidity and exited positions in anticipation of further volatility.
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