Data shows that the crypto derivatives sector has been hit by a number of liquidations as Bitcoin rises above the $66,000 level.
Bitcoin has now recovered to the $66,000 level
The past day was a great day for Bitcoin investors, with the price showing a sharp recovery spike and reaching the $66,000 level for the first time since late last month.
The chart below shows what the recent price movement of the asset has been.
The graph shows that this 6% increase over the past 24 hours means that it won't be long before Bitcoin surpasses its September high. A breach of this top would take assets to their highest level since July.
As usual, BTC is not the only participant in this bull market, with other sectors also following BTC's lead. Coins such as Ethereum (ETH) and Solana (SOL) outperformed their underlying digital assets, posting gains of 8% and 7%, respectively.
Given the volatility in the market over the past day, it's no surprise that we've seen some big changes on the derivatives side.
Cryptocurrency derivatives currently have $233 million in liquidations
According to data from CoinGlass, a large number of liquidations have occurred in the crypto derivatives market in the past 24 hours. When a contract is forcibly terminated by the platform after a certain loss has been exceeded, the contract is said to be “liquidated”.
Below is a table showing the numbers associated with the latest mass liquidation events.
Looks like the latest derivatives flush has been short-dominated | Source: CoinGlass
As seen above, approximately $233 million in derivatives contracts related to all cryptocurrencies were liquidated during this period. This flash was almost entirely a short-term contract, as those investors who bet on a bearish outcome suffered losses of $198 million, nearly 85% of the total liquidation amount.
As for individual symbols, Bitcoin came out on top as expected, with almost twice as many liquidations as Ethereum in second place. However, while BTC's share is the highest in the space, it is only 39% of the total, suggesting that altcoins have recently enjoyed a significant share of their own speculation.
The distribution of the latest liquidations by symbol | Source: CoinGlass
Among assets other than BTC and ETH, Solana had the highest liquidation value of approximately $11 million. SUI and NEIRO rounded out the top five with contract values of $7 million and $5 million, respectively.
Mass liquidation events like today are commonly referred to as squeezes, and this latest event was dominated by shorts, so it's known as a short squeeze.
During a squeeze, liquidations feed back into the price movements that caused them, prolonging the situation and prompting more liquidations. This is why these events tend to be very unstable.
Dall-E, featured image from CoinGlass.com, chart from TradingView.com
