Crypto Futures Market Faces $840 Million in Liquidations Amidst Market Turmoil

Significant Liquidations in the Crypto Futures Market

In the last 24 hours, the cryptocurrency futures market has experienced a staggering wave of liquidations, exceeding $840 million, as the sell-off intensified over the weekend. This downturn was primarily triggered by a strengthening Japanese yen and unsettling rumors surrounding the liquidation of the crypto business by the market maker Jump Trading.

Among the various digital assets, Ether (ETH) futures saw the highest liquidated positions, amounting to over $304 million, surpassing the usual leader, Bitcoin (BTC). Additionally, futures linked to Solana (SOL), Dogecoin (DOGE), XRP, and Pepe (PEPE) collectively faced around $75 million in liquidated bets.

Over 200,000 individual traders found themselves liquidated during this tumultuous period, with the most significant single liquidation order occurring on the Huobi exchange—an impressive BTC/USD trade valued at $27 million. Notably, around 87% of the affected traders were long positions, indicating a widespread expectation of rising prices prior to this dramatic turn of events.

The market was hit hard, with Bitcoin witnessing a decline of more than 11% in just 24 hours, while Ether plummeted as much as 25% before showing slight signs of recovery. According to TradingView data, this marks the most severe single-day price drop for Ether since May 2021, when prices fell sharply from over $3,500 to around $1,700. The TradingView daily candle illustrates performance from UTC 00:00 to 23:59.

This sharp decline has led the widely used crypto fear and greed sentiment index to signal “fear,” reaching its lowest point since early July. This index evaluates volatility, prices, and social media activity to gauge whether market participants are feeling fearful—often a precursor to local price bottoms—or greedy, which typically indicates market peaks.

Liquidations occur when an exchange forcibly closes a trader’s leveraged position due to the trader’s failure to maintain the required margin. This situation arises when traders lack sufficient funds to uphold an open trade, leading to automatic liquidation.

The downturn in crypto markets began last week, spurred by escalating geopolitical tensions in the Middle East and disappointing earnings reports from technology companies. These events hindered the enthusiasm surrounding artificial intelligence (AI) investments, prompting a broader retreat from high-risk assets.

The situation escalated early Monday, as the yen surged to seven-month highs, driven by increasing expectations for further rate hikes by the Bank of Japan and the unwinding of carry trades. Consequently, Tokyo’s Topix 100 index experienced its most significant drop since 2011.