Altcoin Liquidations Surge as Cryptocurrency Market Plummets

The cryptocurrency derivatives market has experienced significant liquidations over the past day following a substantial decline in altcoin values.

Altcoin Longs Hit Hard, Ethereum Leads Liquidations

The last 24 hours have been tumultuous for the crypto market, with most altcoins dropping over 5%. This volatility has spilled over into the derivatives market.

Major Liquidations

Data from CoinGlass reveals that nearly $429 million in derivative contracts have been liquidated in the past day.

Liquidation Explained: A contract is liquidated when an exchange forcibly closes it due to significant losses.

Long positions faced the brunt of these liquidations, with around $367 million (over 85% of the total) involving traders betting on market gains. This is due to the sharp decline in cryptocurrency prices.

Heatmap of Liquidations

A heatmap from CoinGlass shows the distribution of these liquidations:

Ethereum (ETH): Leads with $92 million in liquidations, primarily due to a price drop of over 3%.

Dogecoin (DOGE) and Shiba Inu (SHIB): Follow with $60 million and $23 million in liquidations, respectively, both experiencing around 11% drops.

Interestingly, Bitcoin (BTC) saw fewer liquidations, as it remained relatively stable during this period.

Long Squeeze Event

A mass liquidation event like this is known as a "squeeze," where cascading liquidations amplify market volatility. Given that the majority of liquidations were long positions, this event is termed a "long squeeze."

While such squeezes are common in the volatile crypto market, the scale of this altcoin-dominated squeeze is unusual.

ETH Price Drop

In the aftermath, Ethereum, the largest altcoin, has fallen to the $3,400 level.