Key conclusions
- The sharp decline in prices of leading digital assets triggered the forced liquidation of $563 million in futures contracts in just one day.
- Ether and bitcoin generated the vast majority of losses, outpacing other tokens in terms of the scale of the collapse in leveraged pro-growth positions.
Cryptocurrency investors betting on price increases experienced their worst day in over three months. Declines in market values of leaders resulted in mass, forced closures of orders on derivatives exchanges. Over the past 24 hours, trading platforms have erased leveraged bullish bets in the futures market worth a total of $563 million. The scale of market asymmetry is demonstrated by the fact that in the same period, short positions, i.e. speculations aimed at declines, recorded losses of only USD 65 million.
This situation became the largest one-day decline since February 6, when the sudden collapse of bitcoin prices to the level of $60,000 destroyed pro-growth positions worth $1.84 billion. Current analytical data from the Coinglass platform confirm a drastic shift in market sentiment.
BTC and ETH Valuation Drives Forced Liquidations in the Futures Sector
The main flashpoint turned out to be Ether. The world’s second largest cryptocurrency in terms of capitalization took the strongest supply hit, generating as much as $244 million of the total pool of losses. Bitcoin came in second place, with forced closings of positions amounting to $160 million. These two key digital assets account for the lion’s share of the market exodus that has rapidly cleared stock markets of bullish leverage.
This mechanism worked automatically. Cryptocurrency exchanges launch professional security procedures when the price movement goes in a direction completely opposite to the investor’s assumptions and the security deposit no longer covers the growing loss. Trading in futures contracts allows you to open exposures with the involvement of only a fraction of the real value of the transaction, with the rest of the amount financed by the stock exchange. When the market rises, profits multiply, but when the market falls, deposits disappear quickly and brokers close orders.
After falling 5 percent in the week ended May 17, Bitcoin continued its decline below the $77,000 level. At the same time, Ether fell by 10 percent, reaching $2,129.
🚨 BITCOIN FLUSHES TO $77,300 – $660M LIQUIDATED IN 24 HOURS Bitcoin slide to $77,300 amid a major leverage flush across crypto markets. $591M longs liquidated. $69M shorts liquidated. Next major liquidity zone: $82,038 👀Track live liquidation heatmaps on
Rising Treasury bond yields and mass liquidations
Analysts widely link these sharp price movements to higher-than-expected US consumer inflation data released last week. The effect of this publication was an immediate increase in the yield of US treasury bonds. A similar trend can be seen in other developed economies of the world, where increases in the yield of sovereign debt effectively affect the attractiveness of risky assets that do not generate stable income, including cryptocurrencies.
The events of the last 24 hours clearly demonstrate that global macroeconomic factors can completely neutralize local, industry growth stimuli. Legislative progress in Washington provides important long-term momentum, but has failed to shield aggressively leveraged players from the effects of rising inflation and a spike in bond yields, which have reduced overall risk appetite.
