Crypto
traders
Tuesday
endured
the
largest
leveraged
long
wipe-out
in
three
months
as
the
ETF-fueled
rally
for
digital
asset
prices
reversed
sharply
lower.
Big
declines
across
the
board
prompted
over
$307
million
in
liquidations
of
leveraged
crypto
long
positions
–
bets
on
higher
prices
–
over
the
past
24
hours,
data
from
CoinGlass
shows.
This
was
the
largest
amount
of
liquidated
longs
in
a
day
since
August
17,
when
bitcoin
(BTC)
plunged
from
above
$28,000
to
about
$25,000
in
the
space
of
a
few
minutes.
Today’s
wipeout
happened
as
BTC
tumbled
4%
to
$35,000
despite
a
generally
supportive
environment
for
risk
assets
following
a
cooler-than-expected
October
inflation
reading
that
sent
stocks
sharply
higher
and
bond
yields
substantially
lower.
The
decline
was
broad-based
across
crypto,
including
ether’s
(ETH)
6%
fall
to
below
$2,000.
Today’s
action
stands
in
contrast
to
that
of
the
past
few
weeks
which
have
been
notable
for
“short
squeezes”
as
rising
asset
prices
forced
liquidations
of
money-losing
leveraged
bets
on
lower
prices.
Liquidations
happen
when
an
exchange
is
forced
to
close
a
leveraged
trading
position
due
to
the
partial
or
total
loss
of
the
trader’s
margin,
or
money
down.
Cascading
liquidations
can
exacerbate
price
volatility
as
traders
cover
their
positions,
flushing
out
excess
leverage
on
the
market.
The
large
amount
of
liquidations
suggests
that
the
sudden
decline
in
prices
caught
most
investors
off-guard,
with
88,667
traders
getting
flushed,
CoinGlass
shows.
Bitcoin
traders
suffered
the
most
liquidations
at
$133
million,
followed
by
ETH
traders
with
some
$70
million.
JPMorgan
analysts
said
in
a
report
last
week
that
the
recent
rally
in
cryptocurrency
prices
was
getting
“overdone,”
as
investors
became
overly
optimistic
about
the
spot
BTC
exchange-traded
fund
approval’s
impact
on
asset
prices.