Analysis of Recent Crypto Liquidations
Overview
The total liquidations between Jan. 14 and Jan. 15 reached $201.87 million, with a skewed distribution favoring short positions. Data from CoinGlass showed that 74,152 traders were liquidated during this period, showing that yesterday’s price spike caught many traders off guard.
Shorts Disproportionally Affected
Liquidation data shows that shorts were disproportionally affected, making up about 64.89% of all liquidations. The significant percentage suggests that many traders were positioned for a price decline but were caught in a rebound again.
Largest Exchanges by Liquidation Volume
The largest exchanges by liquidation volume were Binance ($83.49 million), OKX ($43.63 million), and Bybit ($38.54 million), with Binance alone accounting for 41.36% of all liquidations. Smaller exchanges like Gate.io and HTX show significantly higher percentages of short liquidations (68.89% and 74.8%, respectively) than larger ones, indicating potentially aggressive short positions or inefficient risk management practices.
Altcoin Traders Poorly Positioned
Ripple’s XRP saw a 14.34% increase, leading to $12.61 million in short liquidations over 24 hours. This outsized move suggests that altcoin traders were particularly poorly positioned for upward price movement. BTC dominated the liquidations with $57.94 million, followed by ETH at $37.54 million.
Temporal Distribution of Liquidations
The temporal distribution of liquidations shows acceleration, with the 4-hour period recording $21.26 million in liquidations compared to $6.69 million over the 1-hour period. This progressive increase suggests that initial liquidations may have triggered a chain reaction, forcing more positions to close as prices continued to move against short traders.
Market Susceptibility to Cascade Effects
Over 74,000 traders were liquidated in this period while the price moves were relatively modest (2.51% for BTC, 1.84% for ETH), suggesting that the market was heavily leveraged. This level of risk makes the market particularly susceptible to cascade effects where initial price movements can trigger chain reactions of liquidations.
Conclusion
The recent wave of liquidations in the crypto market highlights the high leverage and potential for cascade effects, impacting traders across different exchanges and assets. Proper risk management and awareness of market conditions are essential for navigating such volatile periods.