Data shows that the cryptocurrency derivatives sector suffered numerous liquidations as Bitcoin hit the $66,000 mark.
Bitcoin has now returned to the $66,000 level
The last day was a great time for Bitcoin investors as the price showed a strong recovery, which took it to the $66,000 level for the first time since late last month.
The chart below shows what the asset’s recent price action looks like.
The chart shows that this 6% increase in the last 24 hours means that Bitcoin is no longer far from surpassing the September high. Breaking this high would take the asset to the 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 like Ethereum (ETH) and Solana (SOL) even outperformed the original digital asset, with jumps of 8% and 7%, respectively.
With all the volatility in the market over the past day, it’s no surprise that the derivatives side of things has seen a shake-up.
Crypto derivatives saw $233 million in liquidations today
According to data from CoinGlass, a large number of liquidations took place 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 exceeding a certain level of losses.
Here is a table that shows the relevant numbers related to the latest mass liquidation event:
Looks like the latest derivatives flush has been short-dominated | Source: CoinGlass
As can be seen above, approximately $233 million in derivative contracts related to all cryptocurrencies were liquidated during this window. This chase consisted almost entirely of short contracts, as those investors betting on a bearish outcome suffered a $198 million loss, the equivalent of nearly 85% of the total liquidations.
In terms of individual symbols, Bitcoin predictably came out on top, with almost double the liquidations of second-place Ethereum. However, although BTC’s share is the highest in the sector, it only represents 39% of the total, implying that altcoins have recently benefited from a fair share of their own speculation.
The distribution of the latest liquidations by symbol | Source: CoinGlass
Among assets other than BTC and ETH, Solana saw the most liquidations at around $11 million. SUI and NEIRO complete the top 5 with respectively $7 million and $5 million in contracts.
A massive liquidation event like today’s is commonly referred to as a squeeze and since the latter event involved short dominance, it would be known as a short squeeze.
During a squeeze, liquidations feed back into the price action that caused them, thereby lengthening it and triggering a wave of additional liquidations. This is why these events tend to be so volatile.
Featured image of Dall-E, CoinGlass.com, chart from TradingView.com
