$200 Million in Crypto Wiped Out as Altcoin Collapses at the Beginning of the Week

According to data from CoinGlass, liquidation trades have increased in the cryptocurrency futures market over the past 24 hours. Here, 'liquidation' refers to the forced closing that any open contract must undergo after accumulating a certain level of loss. When a large amount of liquidation occurs at once, this event is often referred to as strangulation. The likelihood of strangulation occurring depends on two factors. The first is volatility, as a larger movement in price will mean a wider range of contracts pushed into the red zone. Another factor is leverage, a loan that derivatives market traders can choose to pledge their initial collateral. Leverage is often multiple times the position, so the benefit of having leverage is that any profits earned are multiplied by the same factor. But because this also applies to losses, it will be easier to be liquidated by leverage if the bet is unsuccessful. In the field of cryptocurrency, assets can often be volatile and positions tend to be overleveraged, so tightening can occur over time. In the past day, the market once again witnessed a significant increase in volatility, leading to another round of liquidation tightening. Here is an analysis table of the figures related to this event:

As can be seen above, the cryptocurrency derivatives sector has recorded a total of 268 million USD in liquidations in the past 24 hours. Out of which, 217 million USD positions related to price increases. Long-term contract holders were hit hardest by this liquidation, naturally because the price of altcoins plummeted during this period. Below is a heat map displaying the contribution levels to the tightening round from each individual asset:

In general, Bitcoin (BTC) tops the list, but it seems that this number one cryptocurrency doesn't even make it into the top two this time. This is because this currency has relatively flat volatility during the collapse of these altcoins. Ethereum (ETH), the largest cryptocurrency among altcoins, has provided the largest market share at $56 million. Solana (SOL), the cryptocurrency, has faced the worst decline among the top 10 digital assets at 6%, ranking second at $33 million. ETH price Ethereum has seen a recovery over the weekend, but it seems that the currency has returned to that level as the new week begins as the price has dropped by 4%, down to $2,700.