In the wake of a 10% drop in the value of XRP and Dogecoin, the cryptocurrency derivatives market is reeling, with liquidations nearing a staggering $1 billion. Data from CoinGlass reveals that the past 24 hours have seen a flurry of liquidations, a term used to describe the compulsory closure of an open contract when losses surpass a certain threshold set by the platform.
The table below provides a detailed breakdown of the recent liquidations in the digital asset market:
As the data indicates, the cryptocurrency sector has experienced a colossal $967 million worth of derivatives contract liquidations over the past day. The majority of these positions were long ones, with users betting on a bullish outcome being hit the hardest, totalling around $829 million.
The wave of liquidations follows bearish price action across various assets. Currently, XRP and Dogecoin are down by approximately 10%. Interestingly, Bitcoin (BTC) remains relatively stable amidst this market-wide downturn, indicating a possible shift of investor capital away from altcoins.
The heatmap below reveals that Ethereum (ETH) leads the pack in liquidations, with a massive derivatives clear-out of nearly $200 million. XRP trails behind with $115 million in liquidations. Despite Bitcoin’s stability, users still managed to accumulate $84 million in liquidations. Solana (SOL) and Dogecoin round out the top five with $58 million and $56 million, respectively.
This extensive liquidation event may be the fallout from the overextended conditions that had been simmering in the sector. A recent report from on-chain analytics firm Glassnode reveals that Open Interest, an indicator that measures the total number of open futures positions related to an asset on all centralized exchanges, has significantly increased across top altcoins since July began. The combined value for Ethereum, Solana, XRP, and Dogecoin has jumped from $26 billion at the start of the month to $44 billion now.
Historically, a surplus of leverage has stirred market volatility, with the recent squeeze potentially being a manifestation of this phenomenon. At the moment, XRP is hovering around $3.17, representing a 4% decrease on the week.
