Yesterday saw an unexpected dip in the cryptocurrency markets, culminating in approximately $735 million in reported liquidations. Investors in cryptocurrencies that quickly depreciated were the most affected, catching those expecting a positive price surge off guard.
Do Altcoins Bear the Brunt?
Altcoins, instead of Bitcoin, faced the harshest fallout. Total losses for Ethereum (ETH) investors hit nearly $152.78 million, with XRP investors seeing a close $88.58 million wiped out. Meanwhile, Bitcoin’s losses were significantly lower at $65.29 million, reflecting a growing preference for altcoins recently.
Which Tokens Were Hit the Hardest?
Alongside Ethereum and XRP, Solana‘s SOL saw considerable liquidations of $41 million, and Dogecoin (DOGE) followed closely with $40 million at stake. Lesser-known DeFi tokens such as SPK and PUMP weren’t spared, facing multi-million dollar liquidations.
An intensified market sell-off and profit-taking from resistance levels have contributed to the slide. As Ethereum approached $4,000 and Bitcoin surpassed $118,000, profit-making by significant wallets prompted heightened selling activities.
What Drove Leveraged Losses?
Liquidations in these volatile markets occur when leveraged trades surpass investors’ margin thresholds during unforeseen price shifts, often triggering a cascading effect.
“Long positions worth $625.5 million faced liquidation, reflecting the widespread impact of the abrupt market drop,” stated CoinGlass data.
Market participants use liquidation figures to gauge trends and sentiment. Large long liquidation counts often signal precipitous declines, while widespread short liquidations may foretell impending price recoveries.
- Ethereum fell about 3.6% by Tuesday, taking its rate to $3,540.
- XRP recorded a 6% drop to settle at $3.25, marking over a 12% weekly decline.
- Bitcoin experienced a roughly 2% decrease, trading close to $116,800.
Recent market volatility underscores the persistent risks within the crypto domain, particularly for high-leverage investors who face abrupt financial hits. Indicators like open position figures and funding rates remain crucial predictive tools, spotlighting impending risks and potential volatile shifts.
