More than $17 billion in bitcoin liquidated so far this year
This year’s bitcoin bear market has been brutal for traders with more than $17 billion worth of bitcoin liquidated from the markets in margin trading since the start of this year, according to CryptoQuant.
Some of the most prominent exchanges where these liquidations occur are Binance, FTX, Okex, Bybit, Huobi and CoinEx.
Larger liquidations obviously go hand in hand with large price movements and increased volatility with traders often liquidating when they are on the wrong side of the trend. This was seen on September 9, when $114 million in bitcoin was liquidated on the short side as the exchange rate jumped from $19,321 to $21,000.
However, data also shows that traders are liquidated even when they correctly bet in favor of the daily trend – a clear sign that they are buy tops and sell dips or uses excessive leverage.
For example, on April 21, when bitcoin fell from $41,369 to $40,488, more than $37 million of the currency was liquidated on the short side. On the same day, more than $63 million in long positions were liquidated as traders bet that bitcoin would bounce back from $40,000.
Read more: Binance to liquidate major stablecoins – but not Tether
The day with the highest volume of liquidations appears to be June 13 when more than half a billion dollars worth of bitcoin was liquidated as the price fell from $26,565 to as low as $22,447. That day it was more than 209 million dollars were liquidated from the short side and more than $324 million from the long side.
It wasn’t just bitcoin that was liquidated – the stock markets also suffered
June 13 was also a bad day for equity markets as the S&P500 fell below the 3,800 level for the first time this year. The month of June had also opened with a very rough trading day as more than €200 million in bitcoin was liquidated on the first trading day of the month: $109 million on the short side and $100 million on the long side.
Overall, there have been more long liquidations than short liquidations this year, consistent with the bear market trend with long liquidations totaling more than $9.446 billion and short liquidations a total of 7.590 billion dollars.
There are rarely—if ever—less than $1 million in liquidations on either side of the trade. A notable exception was on September 3, when only $882,198 was liquidated on the short side. However, this was in stark contrast to the more than $5 million in long liquidations as the price fell from $19,999 to $19,777. Saturdays are usually known as the least liquid day of the week.
Bitcoin and crypto margin trading is big business for brokers and exchanges. Take FTX founder Sam Bankman-Fried who made much of his fortune from the many clients that trade on his exchange. Earlier this year, however, the curly-haired billionaire described as “unhealthy” high-leverage trading activities such as Binance and FTX reduced leverage limits following a heated controversy over its role in the crypto ecosystem.
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