Wednesday, 11 December 2024
by BD Banks
Some top crypto assets liquidated in the past day included more than $1.53 billion in longs and $155 million in shorts. These record crypto liquidations prove that the crypto market has become so volatile.
There were $235 million in Ethereum liquidations, while it was $182 million for Bitcoin. Following the liquidations, Ether price dropped by 7% in the last 24 hours to trade at $3,686
Similarly, BTC price slipped below the psychological $100,000 level to $96,652, reflecting bearish investor sentiment.
Small-cap cryptocurrencies led the crypto liquidation wave, recording $564 million. Out of this amount, $543 million came from long positions, indicating traders’ overconfidence in price increases.
Small-cap tokens emerged as the biggest losers, revealing their vulnerability during market instability. Most of these liquidations were long positions, underscoring the inherent risks of trading lesser-known assets, especially when market sentiment shifts quickly and dramatically.
The sharp surge in liquidations immediately impacted the entire market. In 24 hours, the global cryptocurrency market cap fell 6.62% to $3.44 trillion. However, trading volume jumped an impressive 113% to $313 billion in the same period.
The contrast of declining market capitalization with increasing trading activity suggests a heightened fear and speculation. In such situations, traders mitigate their losses or use such opportunities to expand their holdings.
Major exchanges such as Binance, OKX, and Bybit noted significant crypto liquidations. Binance accounted for $739 million (the highest among the exchanges), followed by OKX and Bybit with $422 million and $369 million, respectively.
The largest single liquidation was Ethereum-USDT pairs on Binance at $19.69 million.
Like the leading cryptocurrencies and small-cap ones, XRP and meme coins also experienced notable declines during this crypto liquidation frenzy. For instance, XRP’s price tumbled 9.6% to $2.15, while Dogecoin shed 7.8% to trade at $0.398.
Similarly, Shiba Inu’s (SHIB) price and Dogifwhat (WIF) declined by 11.3% and 14.9%, respectively. On-chain data indicated that XRP liquidations reached $72.85 million within this period, with $56.82 million in long positions.
Similarly, Dogecoin liquidations included $90.15 million in long positions against the total liquidations of $100.55 million. Following these crypto liquidations, the meme coin’s crypto market cap dipped by 15.4% to $126.99 billion at the time of writing, representing a 3-week low.
Amidst such turmoil, market pullbacks create buy opportunities for seasoned traders and investors. According to history, such sharp declines have often been followed by strong recoveries.
For instance, Bitcoin’s recent performance has shown signs of possible recovery. After testing critical support levels, it shows signs of resilience. Analysts predict a reversal in the short term, although technical indicators suggest some consolidation may occur first.
Consequently, traders seeking to capitalize on this opportunity should closely monitor key resistance levels, such as $101,171, for a bullish breakout.
Amid this market correction, data from the on-chain analytics platform Santiment suggests that retail investors consider the recent downturn a prime opportunity to “buy the dip.” The platform noted that investor sentiment has surged, driven by a significant increase in social media activity related to “buy” and “cryptocurrency.”
Santiment remarked that during the last four correction events, social media volumes spiked, indicating a willingness among retail investors to accumulate assets during market pullbacks. Meanwhile, this current pullback has seen the highest social volume in recent history, suggesting strong investor confidence.
Memecoins have come under particular pressure during this market downturn. This is evident in one key indicator of market strength – open interest (OI).
This indicator dropped significantly for popular meme coins, signaling bearish momentum. Open interest is the number of outstanding derivative contracts (futures or options) that have not yet been settled.
A decline in open interest usually suggests less market activity with a close of most positions. The sharp decline in open interest across meme coins, especially PNUT, DOGE, WIF, and PEPE, demonstrates that leveraged traders are closing their positions to mitigate risk.
The post Crypto Liquidations Hit Record $1.7 Billion: What to Know first appeared on CryptocyNews.com.