Long liquidations spike to over $320 million today as bitcoin, ether stumble

Bitcoin BTC -3.19% experienced a slight downturn today, dropping to $42,200 in the early Asian session from an earlier high of $43,800 — marking a decrease of nearly 4%. Ether also declined almost 5% to $2,230, along with most altcoins.

This downturn led to a substantial liquidation of long positions on centralized exchanges. The volatility resulted in the liquidations of more than $94 million in bitcoin positions, with the majority ( $85 million ) being longs.

The overall crypto market recorded $320 million in long positions being liquidated, contributing to a total of $360 million in liquidations across various exchanges, according to CoinGlass data .

In derivatives markets, liquidations occur when a trader’s position is forcibly closed due to insufficient funds to cover losses. This situation arises when market movements are unfavorable to the trader’s position, leading to the depletion of their initial margin or collateral.

Will Sheehan, founder of data provider Parsec, noted a surge in DeFi liquidations as well at around $2 million, stating it’s the first time in more than a year that “retail has been getting leveraged on-chain.”

Within derivatives markets, funding rates for bitcoin, ether and other cryptocurrencies dropped below +0.01% today — down from over +0.1% observed in the past few weeks — indicating reduced demand for leveraged longs, per CoinGlass data .

Heading towards 2024, analysts maintain a positive outlook on cryptocurrency. Experts at investment management firm VanEck predict Bitcoin will achieve new all-time highs by the fourth quarter of next year. This optimism is driven by expectations for the upcoming Bitcoin halving event and the potential launch of a spot bitcoin exchange-traded fund.