More than $1.89 billion worth of cryptocurrency futures positions were liquidated over the past 24 hours as Bitcoin and Ether sharply dropped.
In the last 24 hours, $1.89 billion worth of futures positions have been liquidated after Bitcoin (BTC) and Ether (ETH) sharply fell, with BTC reaching below $46,000 on Binance.
Most of the liquidations came from Bitcoin and Ether, which accounted for $555 million and $336 million, respectively. But altcoins like XRP, EOS and Litecoin (LTC) also saw large liquidations as the market plummeted.
The lion’s share of the liquidations happened on Binance, while Bitfinex saw the least. This suggests that the former may have the biggest share of novice traders, according to Bitfinex chief technology officer Paolo Ardoino.
“Bitfinex has almost 1B in open interest but extremely low liquidation rate compared to competition,” explained Ardoino.
“Finex seems to have traders that use leverage slightly more carefully.”
Factors behind the short-term price drop
Bitcoin was relatively resilient compared with the rest of the market during the correction. Mostly, large-cap altcoins and decentralized finance tokens saw the biggest losses, such as Cosmos’ ATOM and SushiSwap’s SUSHI dropping by over 20% in a single day.
The market likely corrected as a result of the altcoin futures market being extremely overheated for a prolonged period.
In recent weeks, many altcoins on platforms like Binance Futures saw funding rates spike to around 0.3% to 0.7%. This is 30 to 70 times higher than the average 0.01%.
This is likely the reason behind Bitcoin’s relatively small drop of around 7% compared with the 20% to 30% corrections in the altcoin market.
But unlike Bitcoin, Ether showed short-term weakness even as Bitcoin was rallying to a new all-time high, as Cointelegraph reported.
Hence, when BTC began to fall, Ether saw a much larger loss compared with Bitcoin, dropping by 9% in the same period.
Throughout February, especially when the ETH/BTC pair was showing strength, ETH saw a smaller pullback compared with Bitcoin as it entered price discovery. The weakness of ETH against Bitcoin has had a negative impact on the altcoin market in the last 24 hours.