On Wednesday, crypto futures traders lost more than $400 million as most cryptocurrencies fell below support levels due to hawkish comments by the U.S. Federal Reserve.
After nearly a billion dollar worth of losses due to liquidations on January 21 and $470 million on January 22, Wednesday’s numbers were the third highest of 2022. Bitcoin dropped to $42,500, from $47,000 at that time.
A liquidation is when an exchange closes a trader’s leveraged position to provide safety. This may be due to partial or complete loss of the initial margin. This is most common in futures trading which tracks asset prices only. It does not happen in spot trading where traders actually own the assets.
Futures tracking Solana’s SOL and Dogecoin’s DOGE suffered a combined $40million in liquidation losses. This is the highest total of major cryptocurrencies other than bitcoin and ether. The list also included GMT tokens from StepN, a month-old crypto project. They had $9 million in losses.
Doge and GMT were the top gainers over the last week. Doge prices rose on speculation that Elon Musk’s appointment as a Twitter board member would be a positive catalyst to Dogecoin’s growth. Stepn was popular among traders because of its unique step-to earn approach.
Bitcoin futures suffered losses of $92 million, which is the highest among all cryptocurrency. ETH futures suffered losses of $64 million. Over $40 million worth of liquidations were already reported as of Thursday morning in Asian hours.
Data From tracking tool Coinglass, most liquidations occurred on cryptocurrency exchange Binance with losses of over $133million. Traders on OKX or FTX suffered the next largest losses, with $68 million and $100 million respectively.
After Wednesday’s bitcoin drop below $45,000 support, 83% of traders were either long or betting on higher prices. The asset has fallen another 5% and now trades at $43,500 as of writing.
