Bybit CEO Challenges Reports on Crypto Market Liquidations
Bybit CEO Ben Zhou has raised concerns about the accuracy of reports that claim today’s crypto market liquidations totaled only $2 billion. Zhou believes that the actual figure may be much higher, ranging between $8 billion and $10 billion.
Internal Data Discrepancy
Zhou pointed to Bybit’s internal data, which indicated $2.1 billion in liquidations on their platform alone over the last 24 hours. This figure contrasts sharply with the $333 million reported by Coinglass, suggesting a significant underreporting issue within the industry.
Zhou acknowledged that exchanges like Bybit enforce API restrictions that limit the frequency of data updates, potentially distorting the true picture of liquidation volumes.
Data Distortion in Crypto Market
Zhou’s concerns align with Vetle Lunde, head of research at K33 Research, who has been critical of the reliability of liquidation data since mid-2021.
Lunde explained that major exchanges such as Binance, OKX, and Bybit have imposed restrictions on their WebSocket APIs, capping liquidation reports at one per second. This practice significantly underestimates the actual liquidation volumes in the market.
Liquidations occur when traders are unable to sustain leveraged positions due to insufficient funds. While common in the volatile crypto market, today’s liquidation levels are among the highest seen recently, surpassing events like the Terra/Luna implosion and the FTX collapse.
Market Sentiment and Risk Trends
Liquidation data serves as a crucial indicator of market sentiment, leverage exposure, and risk trends. However, some exchanges may obscure the full extent of liquidations to maintain trader confidence.
Lunde argued that disclosing the true scale of losses could discourage users, while controlled reporting gives exchanges a competitive edge. Some trading platforms may have ties to investment firms that benefit from selective market data.
Lunde concluded by highlighting the challenge of accurately estimating liquidation volumes, considering changes in market participant behavior over time and the unique liquidations observed at certain exchanges.