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Crypto Long Trades Account for 90% of Total Liquidations as Bitcoin, Ether Slump

Aug 17, 2023 at 09:08 am

Amidst a lack of immediate market catalysts, a particular trading company has set a price target as low as $24,000 for the upcoming months.

The past two days saw a significant downturn for Bitcoin (BTC) and Ethereum (ETH) futures traders, leading to some of the most substantial losses in over a month. During this time, prices slipped beneath crucial support levels, ending a period of stagnation. By late Wednesday, Bitcoin had fallen to just below $28,500, signifying one of the largest two-day price drops since mid-June. The decline in Bitcoin's value had a domino effect, causing other major cryptocurrencies like ether, XRP, and solana (SOL) to decline by as much as 5%. In the last 24 hours, liquidations on futures linked to major tokens surged past the $160 million threshold, pushing total losses to over $320 million since the beginning of the week. Interestingly, these losses transpired during a phase of notably low volatility for Bitcoin.

Bitcoin futures recorded losses nearing $50 million, followed by ether with $22 million and Litecoin (LTC) with $5 million in losses. Traders involved in Bitcoin Cash (BCH), Solana (SOL), and XRP collectively experienced losses of nearly $4.5 million each. Data from Coinglass indicates that long trades, which entail bets on higher prices, accounted for around 90% of all liquidations. Liquidation takes place when an exchange forcibly closes a leveraged position of a trader due to the trader's initial margin suffering partial or total loss. This occurs when a trader fails to meet margin requirements for a leveraged position or lacks sufficient funds to maintain the trade open.

Substantial liquidations can potentially serve as signals for either local price tops or bottoms, offering traders the opportunity to adjust their positions accordingly. Concurrently, trading firm QCP Capital, in a recent Telegram broadcast, projected a gradual decline in prices in the immediate absence of market-moving catalysts. The firm speculated that Bitcoin's price could range between $24,000 and $26,000 in the months to come.

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