$460M Crypto Longs Squeezed As Bitcoin Slips Below $90,000

Data shows the crypto derivatives market has faced a fresh wave of liquidations as Bitcoin and other assets have gone through a retrace.

According to data from CoinGlass, a notable amount of liquidations have occurred in the crypto derivatives market over the past day. “Liquidation” refers to the forceful closure that any open contract undergoes after it has amassed losses of a certain percentage specified by the platform.

A mass amount of simultaneous liquidations can occur when the asset’s price observes a sharp price swing, not allowing investors the time to close their positions. The risk of this happening can increase depending on how much leverage traders are opting for.

The trigger for the derivatives flush in the past day has been a downward move across tokens in the digital asset sector, which took Bitcoin to a low under $89,600.

Below is a table that shows the numbers involved in this liquidation event.

In total, the crypto market has witnessed over $462 million in liquidations during the last 24 hours, with longs dominating most of the flush. More specifically, bullish bets made up for $418 million of the positions involved, representing more than 90% of the total.

The large amount of liquidations could indicate that the recovery in Bitcoin above $94,000 lured traders into opening fresh longs, which then ended up getting caught out by the price plunge.

In terms of the symbols, the largest contributor to the liquidation event has been BTC with $132 million in positions involved, while Ethereum hasn’t been too far behind with a flush of $116 million.

Interestingly, while the top two have been predictable, the third place hasn’t been occupied by the usual suspects this time. As the above heatmap displays, contracts related to Zcash (ZEC) have been caught up in liquidations of $24 million.

The asset managing higher liquidations than the likes of XRP and Solana could be down to the fact that it has seen a notably sharper drop over the last 24 hours.

The latest liquidation squeeze has come as the futures market has been witnessing a re-expansion of Open Interest, as highlighted by Glassnode in its latest weekly report.

The bearish price action between October and November had caused a massive amount of liquidations and forced traders to pull back on risk, resulting in the Open Interest taking a significant hit. Recently, the metric has seen a turnaround, implying investors have gradually been building up positions again.

At the time of writing, Bitcoin is trading around $89,500, down 2% over the past day.