There was a major crypto crash on Sunday, and it caught many overleveraged traders off-guard. According to an article on Coindesk, the crypto futures market saw its highest number of liquidations in history, with $10 billion worth of positions being lost.
Bitcoin futures made up over 50 percent of market-wide liquidations, according to reports. Its value took a hefty drop from $60,000 to $52,148 causing a domino effect with other cryptocurrencies. Much of the loss was due to long positions and bullish trades.
“This [downward] move was definitely driven by the vast amount of futures being liquidated,” Viktor Franken, an options trader at Orca Traders, told CoinDesk in a Telegram chat. “Additionally, it was a weekend, and liquidity was thin during the early Asian hours.”
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Binance and Kraken offered the biggest trading discounts after the crash. “On Binance, the drop was so bad that you were able to pick up long-term futures at prices well below the spot market,” Adam Cochran, a partner with Cinneamhain Venture, wrote in a tweet. “While spot [markets] dipped to $51,000, futures were trading in the low $40,000.”
While the overleveraged buyers were taken aback, Alamedo crypto trader Sam Trabucco said he saw the crash coming.
“I’ve seen a lot of complex theories for why crypto *started* crashing, but I don’t think you really need ’em,” Trabucco wrote in a Twitter thread explaining his take on what happened. “BTC rallied from 60k -> 65k in the days pre-COIN, fell to 62k quickly, and then … well, fell to 60k over the next weekend. Kinda no biggie and exactly what I’d expect?”
The situation has now stabilized and analyst Ipek Ozkardeskaya said that should bring traders some solace.
“The fact that we’ve seen strong buying interest near the psychological $50,000 mark should be a relief for bitcoin bulls following the weekend plunge,” Ozkardeskaya told CoinDesk.