Bitcoin Crash: Derivatives Traders Lose $202 Million in 24 Hours

by James · March 11, 2023

Bitcoin Crash: Derivatives Traders Lose 2 Million in 24 Hours

Bitcoin Crash: Derivatives traders lose $202 million in 24 hours

The crypto market suddenly turned red on March 10 in the year’s worst sell-off. Bitcoin fell below $20,000 for the first time in three months, and market sentiment is bearish. The aftermath of the crash has helped traders bail out millions of dollars in active trading positions that were liquidated during this period.

Table of Contents

Derivatives traders suffer huge losses

According to data from CoinGlass, derivatives traders have lost about $202 million in the past 24 hours. Leveraged trading or the futures market is when traders speculate using derivatives or borrowing from the stock exchange.

Data showing total liquidations in the last 24 hours on major exchanges: source @Coinglass

In this type of market, traders can either go long (speculate a rise in the coin) or go short (speculate a fall in price). When the price reaches a certain level in contrast to the trading position, the trade is terminated and the trader loses his capital.

CoinGlass data further shows that BTC has the largest liquidation volumes at more than $60 million, with Ethereum a close second at $52 million. This is not surprising since they are the two most traded tokens in the crypto market.

Related reading: The time to sell Bitcoin (BTC) is now, says Peter Schiff

The liquidation figures are the highest recorded since mid-January. On that occasion, the bearish movement in the market saw more than $490 million liquidated in a single day across various exchanges.

Factors affecting the crash in the crypto market

The steep price decline affecting the crypto market has come after recent developments. The crypto bank Silvergate had reported on March 9, 2023 that it would cease operations. This came less than a week after Silvergate Capital Corporation indicated it was considering whether to continue operating this year and shut down its crypto payment network.

These negative sentiments continued with news that New York Attorney General Letitia James has formally sued crypto exchange Kucoin. According to the suit, Kucoin offered, sold and bought securities without required registration. It also claims that ETH, the native token of the Ethereum blockchain, is a security. According to James, ETH falls under the definition of securities as they represent the investment of money in ordinary businesses, with profits derived mainly from the efforts of others.

Related reading: Silvergate to close banking and liquidation operations

Prosecutors allege that Kucoin, one of the oldest exchanges, is engaged in the business of selling and offering to sell commodities through accounts, agreements or contracts to New York accounts, primarily for investment purposes.

Beyond just crypto, some external factors have affected the market with recent forecasts from the US Federal Reserve. Jerome Powell, chairman of the Fed, declared to the US Senate Banking Committee that the economic outlook was not as expected this quarter.

The inflation forecast is expected to lead to higher interest rates than expected during the next Fed meeting, which is scheduled for 22 March.