There’s an old saying among Wall Street veterans, “The market can stay irrational longer than you can stay solvent.” Today’s cryptocurrency market has resonated this maxim quite well. The sheer volatility shown in cryptocurrency prices on a seemingly calm Friday jolted traders out of both long and short positions. This action led to a jaw-dropping total of $216 million in losses due to liquidations over a day, according to CoinGlass data. A clear indication of just how rapid and ruthless the swing of the crypto pendulum can be.
Bitcoin (BTC) had a roller-coaster ride. It mounted above $31,200 in the morning, but plummeted to $29,470 in a quick span, spurting a crisis-like situation. Interestingly, this tumble was in response to a news piece. The U.S. Securities and Exchange Commission (SEC) viewed recent filings for spot bitcoin exchange-traded funds as deficient, initiating a ripple effect among traders. As a follow-up to the initial shock, BTC found stability at around $30,000 and has started to recoup some losses inching towards $30,500. Interestingly, other cryptos seem to have linked arms with BTC and followed its price action in both directions.
The spotlight was on liquidations, an ominous sounding term in the trading world. Over 68,000 traders were annihilated, liquidating $116 million from high-priced bets and $100 million from low-priced bets. This phenomenon occurs when an exchange procures leveraged positions due to a total or partial loss of the initial margin as the trader falls short of funds to keep the position open. A grim reminder of the snake eyes nature of the market.
BTC traders bled $65 million of losses, liquidating their long positions, whereas ether (ETH) traders bid adieu to $36 million through short liquidations. Bitcoin cash (BCH) played its part in the orchestration by generating $22 million of liquidations. BCH surged close to tripling its price in June and sparked heightened trading activity being one of the four assets listed on EDX Markets, a nascent crypto exchange propelled by Citadel, Fidelity and Schwab.
Keeping the dramatic day in perspective, the chief liquidation order unfolded on the Bybit exchange, a BTC-USD position with a valuation of a whopping $4.57 million. A somber reflection of a brutally dynamic day within the cryptosphere. While some traders thrived on the volatility, the majority, unfortunately, found themselves on the losing end. But, as they say “In the game of speculation, it’s not about the cards you’re dealt, but how you play your hand.”
Source: Coindesk
