13 Apr

Almost 300,000 cryptocurrency traders faced nearly $1 billion in losses within 24 hours due to a major market crash on April 12. Unlike typical trends, altcoins surpassed Bitcoin in terms of liquidations. 

Data from CoinGlass's liquidation heatmap revealed 297,536 derivatives trading positions reaching the liquidation threshold, resulting in total daily losses of $937 million. Long positions accounted for the majority of these losses, totaling $824.45 million, while short positions contributed 12% with $112.56 million.

Surprisingly, $248.02 million of these liquidations involved "other" altcoins, or coins that weren't among the top 50 most valuable ones. Given that Bitcoin and Ethereum (ETH) frequently control the trade volume and, hence, the liquidations, this is an unusual leadership. 

Study of the crypto market crash

TradingView's entire crypto market cap index shows a valuation of $2.384 trillion as of this writing. This capitalization is $142 billion less than the $2.526 trillion recorded on April 12 a day earlier.

Still, the 5.6% losses of the aforementioned are superior to those of the "Total 3" index, which does not include Ethereum or Bitcoin. During the same time span, these cryptocurrencies lost nearly $66 billion, or 9%, of their $730 billion market worth.

At now, the "Total 3" holds a capitalization of $664.27 billion, accounting for around 28% of the cryptocurrency market. With a 55% market share, Bitcoin leads the field, with Ethereum coming in second with 17%.

Liquidations of cryptocurrency traders: Why do they occur?

In the derivatives market, cryptocurrency traders initiate a contract by taking a long or short position, so wagering on the future value of the cryptocurrency.

To do that, traders agree on a liquidation price for the underlying asset they are betting on and deposit and commit with collateral. The exchange terminates the contract and liquidates the collateral if the price of the cryptocurrency exceeds the predetermined level.

This demonstrates a few of the dangers associated with dealing in the derivatives market, specifically with futures trading. Conversely, purchasing cryptocurrencies on the spot market is thought to be a more cautious and natural approach to cryptocurrencies and shields investors from liquidation.

April 2024, Cryptoniteuae

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