In brief
- Bitcoin open interest dropped by 8,500 BTC in under 48 hours, a $700 million unwind of leveraged positions.
- One crypto whale saw profits plummet by 93% to $4M, leaving them sitting on $37M in unrealized losses on long positions.
- An analyst says the sell-off was driven by leverage, unlike October’s spot-driven liquidation event.
The crypto market continued its downward slide Friday morning, with nearly $1 billion liquidated in an hour as Bitcoin slipped to an intraday low of $81,868.
The top crypto shed 2% in under 10 minutes, per CoinGecko data, further strengthening the multi-week downtrend.
Over the past 24 hours, the crypto market has seen some $1.97 billion in liquidations, per Coinglass, while the top 10 cryptocurrencies by market cap (barring stablecoins) are down double digits over the past 24 hours, exacerbating the selloff.
As a result, the total crypto market cap dropped below $3 trillion for the first time in seven months.
The S&P 500 index is stabilizing after Thursday’s dip, suggesting the decline was localized to cryptocurrencies.
Uncovering the scale of the drop
“This is the first major flush since October 10,” Maarten Regterschot, a verified analyst at CryptoQuant, told Decrypt.
While the historic liquidation event on October 10 was driven by spot selling, the current drop is leverage-driven,” the analyst explained.
Bitcoin-denominated open interest, which represents the total number of open positions, surpassed the October 10 level by 5,000 BTC on Thursday, hitting 295,054 BTC, according to Velo data. The combined drop over the past 48 hours, however, has undone the position, bringing the metric down by roughly 8,500 BTC to 286,461 BTC.
At Bitcoin’s current price of $82,000, this drop in open interest is worth nearly $700 million. A closer look shows that some $500 million in Bitcoin longs were wiped out in an hour.
Ethereum and Solana longs were next on the leaderboard, with $183 million and $56 million in liquidations, respectively.
While the broader bearish market sentiment stems from fiscal and monetary policy shifts and the more recent widening of credit swaps, Friday’s drop seems to be localized, potentially driven mostly by leveraged whale positioning.
A whale investor is sitting at $37 million in unrealized losses on his Ethereum and Bitcoin long positions. The total profits of this trader have dropped from $63 million on November 10 to $4 million as of Friday, representing a 93% decline.
In a similar turn of events, Jeff “Machi big brother” Huang’s profits have tanked from $44.8 million on September 18 to -$20 million, with nearly $650,000 in losses in over 24 hours.
Looking ahead
The Crypto Fear and Greed Index continues to sit at “Extreme Fear,” while on prediction market Myriad’s own perpetual sentiment market, Fear hovers around 49.7%, reflecting the delicate state of the crypto market.
(Disclaimer: Myriad is owned by Decrypt’s parent company Dastan)
“We are in a very tricky situation in the short term,” Derek Lim, head of research at Caladan, told Decrypt.
Current market activity is not aligning with key economic factors, Lim explained, highlighting significant catalysts that could boost market liquidity, including the end of quantitative easing, the resumption of U.S. government spending, and potential stimulus packages.
However, these developments will take time to influence the market fully, the analyst added, noting that the lag creates a situation where the market has yet to catch up to what are seen as strong economic fundamentals.
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