Record Liquidations in the Digital Asset Derivatives Market: Ethereum and Bitcoin Lead the Surge

The digital asset derivatives market witnessed an unparalleled 24-hour liquidation event, with an estimated $400 million in positions wiped out, equivalent to approximately KRW 556 billion. Ethereum (ETH) and Bitcoin (BTC) dominated the activity, accounting for a major share of the liquidated volume and highlighting their influence in the cryptocurrency market.

$413 Million Liquidated in a Single Day

Data provided by Coinglass as of October 21, 2023, in South Korea confirmed total liquidations reaching $413.46 million (approximately KRW 575 billion) within 24 hours. A closer examination of the numbers reveals that $188.18 million (around KRW 262 billion) emerged from long (buy) position liquidations, while another $225.28 million (about KRW 314 billion) stemmed from short (sell) position liquidations. Short positions made up the larger portion, constituting 54.5% of the overall liquidation activity, reflecting intensified bearish sentiment within the market.

Ethereum and Bitcoin: The Giants of Liquidated Volume

The lion’s share of the liquidation volume stemmed from Ethereum and Bitcoin, accounting for a combined 62% of the total. Ethereum led the charge with liquidations totaling $134.92 million (roughly KRW 187.7 billion), marking it as the most affected asset. Bitcoin closely followed, with $122.35 million (about KRW 170.3 billion) in liquidated positions.

Other notable assets reported relatively minor liquidation figures, including:

• Energy Web Token (ENA): $35.76 million (approximately KRW 4.98 billion)
• Ripple (XRP): $5.89 million (around KRW 820 million)
• Solana (SOL): $4.40 million (approximately KRW 610 million)
• Dogecoin (DOGE): $3.16 million (about KRW 440 million)

Short positions played a decisive role in Ethereum and Bitcoin’s liquidation activity. Ethereum saw $51.96 million (around KRW 72.2 billion) in long positions liquidated alongside $82.96 million (about KRW 115.3 billion) in short positions. Bitcoin followed a similar pattern, with $43.99 million (approximately KRW 61.2 billion) erased from long positions while $78.36 million (about KRW 108.9 billion) disappeared from short positions.

Trading and Open Interest Surge Amid Liquidations

Despite intensifying liquidations, market activity demonstrated robust growth. Total trading volume for the same 24-hour period climbed by 2.23%, reaching $26.78 billion (approximately KRW 37.2 trillion). Open interest—an essential metric indicating the total value of outstanding derivative contracts—rose by 1.92%, surpassing $15.15 billion (nearly KRW 210 trillion). The sheer increase in liquidation, which surged by 24.64% compared to previous periods, indicates heightened volatility and magnified movements within the cryptocurrency sector.

Investor Sentiment Rattled by Persistent Fear

The recent liquidation event underscores continued apprehension among market participants. The Alternative Fear & Greed Index, a pivotal measure of investor sentiment in the crypto sector, recorded a value of 34 during the 24-hour period, placing it firmly in the "Fear" category. While this represented a slight improvement of five points compared to the previous day's score of 29, it still remains far below the neutral level of 49 observed a month earlier.

The persistent prevalence of fear indicates investor caution as they navigate an unpredictable digital asset landscape. Macro-level uncertainties, fluctuating prices, and on-chain data are being carefully scrutinized by traders seeking to mitigate risk during turbulent times.

Conclusion: An Uneasy Market Landscape

The staggering $400 million in digital asset derivatives liquidations underscores the inherent volatility of the cryptocurrency market, which continues to witness swift and severe fluctuations in investor positions. Ethereum and Bitcoin remain central to the market’s activity, their dominance magnified during periods of extreme financial adjustment. Meanwhile, increased trading volumes and open interest show that market engagement persists, albeit under a cloud of caution, as evidenced by the subdued readings of the Fear & Greed Index.

Recent liquidation figures exemplify the precarious balance within the crypto market, marked by rapid shifts between bullish and bearish sentiments. As stakeholders weigh macroeconomic trends and regulatory developments, the road ahead remains uncertain, demanding close vigilance and adaptive strategies.