Traders involved in Bitcoin [BTC] and Ethereum [ETH] are currently experiencing intense pressure. The number of forced closures, both for short and long positions, is skyrocketing at an unprecedented pace. The recent surge in Ethereum liquidations may be partially tied to the Bybit hacker incident, but broader market trends point to a larger underlying issue.
With insufficient margin, traders are being compelled to exit their positions, setting off a chain reaction of liquidations. As volatility increases, these developments are sparking concerns about market stability and the stress on traders.
Dealing with the Surge in Liquidations
As volatility rises, liquidations are surging, leading to aggressive margin calls for traders. The volume of Ethereum liquidations has intensified, resulting in billions of dollars’ worth of forced closures in just the last 72 hours. While the Bybit hacker incident has worsened the turbulence surrounding ETH, the broader market’s leverage appears to be a significant driving force.
Furthermore, the open interest in ETH derivatives has decreased as positions are forcefully liquidated, further fueling price fluctuations.
Meanwhile, Bitcoin’s liquidation levels seem to indicate a broader deleveraging phase, with short positions bearing the initial brunt before longs were swiftly liquidated around the $100k mark. This cycle suggests an accumulation of excessive leverage, where successive liquidations contribute to price instability.
As Bitcoin and Ethereum navigate significant resistance and support levels, market observers are preparing for heightened volatility in an increasingly volatile derivatives market.
Bitcoin and Ethereum in Numbers
The liquidation heatmaps for ETH and BTC have pinpointed critical price levels where traders have faced significant losses.
Between $2,700 and $2,850, ETH experienced a notable cluster of liquidations, with peak liquidation values surpassing $400 million. The majority of liquidations occurred around the resistance threshold, suggesting a liquidity grab before a potential price reversal.
The liquidation event for Bitcoin revealed liquidations totaling over $1 billion near the $100k mark.
Short positions were forcibly closed at lower price points, followed by a rapid wave of liquidations for long positions. The liquidation map illustrated heavy positioning between $92k and $96k, indicating a high sensitivity to leverage in the market.
The Impact of the Bybit Hacker Incident
The Bybit hack, which led to the theft of $1.4 billion in ETH and stETH, has rocked the crypto community. While recovering the funds is the immediate focus, the broader consequences are noticeable in Ethereum’s liquidity and price movements.
The swift selling of stolen ETH via decentralized exchanges by the hacker magnified the selling pressure, intensifying volatility and pushing traders out of leveraged positions. This sudden liquidity shock, coupled with cascading liquidations, likely triggered sharp price drops and increased market uncertainty.
Open interest in ETH Futures, which stood around $23 billion on February 15, has displayed fluctuations but remains elevated as traders adjust their strategies.
Meanwhile, ETH’s price fluctuations within the range of approximately $2,727 to $2,800 indicate a mix of cautious optimism and risk mitigation. The alterations in Open Interest signal that traders are adapting dynamically to market conditions. Nevertheless, prevailing doubts are likely to impact sentiment in the short term.