Crypto Futures Saw Record $10B Worth of Liquidations on Sunday

The crypto futures market saw the highest nymber of liquidations in history on Sunday as the sudden bitcoin (BTC, +0.9%) price pullback caught overleveraged traders off guard. Exchanges offering crypto futures liquidated $10 billion worth of positions on Sunday, toppling the previous market-wide record of $5.77 billion registered on Feb. 23, according to data provider Bybt.

Forced closure of long positions or bullish trades accounted for $9.26 billion, or over 90% of total liquidations, which shows the leverage was excessively skewed bullish across the board. Bitcoin futures accounted for more than 50% of total market-wide liquidations on Sunday. Liquidations happen when trades cannot fulfill margin requirements for holding long/short positions and often exacerbate bullish/bearish moves. Bitcoin dropped sharply, from $60,000 to $52,148 early Sunday, dragging alternative cryptocurrencies lower. As prices started falling, margin requirements increased and exchanges liquidated longs (squared off with offsetting shorts), adding to downward pressure in the market.

The situation has normalized, with futures drawing higher prices than the spot price. Bitcoin is currently trading near $56,700 – up 8% from Sunday’s low, according to CoinDesk 20 data. “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,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told CoinDesk. The cryptocurrency may have received a boost from signs of China is softening its stance on cryptocurrencies. On Sunday, Li Bo, deputy governor of the People’s Bank of China, called bitcoin and stablecoins “investment alternatives.”

Crypto Futures Saw Record $10B Worth of Liquidations on Sunday, CoinDesk, Apr 20