Derivative Liquidations Decline as Major Cryptocurrencies Show Recovery

The cryptocurrency market is showing signs of stabilization following a recent sell-off, with major assets rebounding collectively. This recovery has been accompanied by a notable cooling in the derivatives market, where liquidations have dropped significantly. Over the past 24 hours, total liquidations amounted to $226.23 million, marking a sharp decline in market volatility. This represents an additional 55.8% drop from the previous day, which had already seen a 40% reduction in liquidation volumes. Notably, short positions bore the bulk of liquidations during this period—a reversal from the prior day’s trend of predominantly long-position losses.

A Sustained Decline in Liquidation Activity

Data from Coinglass reveals that liquidation volumes in the derivatives market have been on a steady decline for two consecutive days. As of October 24, total liquidations over the past 24 hours reached $226.23 million—a dramatic 55.8% reduction compared to the preceding day. This trend indicates a significant easing of volatility across the broader cryptocurrency market, further highlighting the stabilization of asset prices.

Investor sentiment appears to be gradually improving. While long positions made up the majority of liquidations during the initial rebound in cryptocurrency prices, the dynamic has shifted within the past 24 hours. The proportion of liquidated long positions decreased markedly, signaling growing market confidence.

Short Positions Dominate Liquidations

Of the $226.23 million liquidated in derivatives over the last day, short positions accounted for $132.21 million, or approximately 51.9% of the total, while liquidated long positions contributed $94.03 million. Analysts attribute this skewed trend to improved market sentiment as key cryptocurrencies collectively rallied, creating favorable conditions for short liquidations.

Bitcoin (BTC) and Ethereum (ETH) were central to these liquidation activities, jointly accounting for more than half of the total liquidations. Bitcoin saw $61.55 million liquidated, breaking down into $47.02 million from short positions and $14.53 million from longs. Ethereum closely followed with $60.62 million liquidated—$31.26 million from shorts and $29.36 million from longs. The heavy concentration of short liquidations reflects the corrective recovery underway in the market.

Other notable cryptocurrencies contributed significantly to liquidation totals as well. Solana (SOL) saw $10.88 million in liquidations, Binance Coin (BNB) added $5.54 million, Ripple (XRP) recorded $2.30 million, and Dogecoin (DOGE) accounted for $2.40 million.

Mixed Signals in Market Activity

Despite signs of stabilization, broader market activity remains a mixed bag. Over the past 24 hours, trading volumes across major exchanges fell by 17.9% to $25.95 billion, signaling reduced speculative activity. On the other hand, open interest—or the total value of unsettled derivatives contracts—rose by 2.1%, bringing the figure to $15.10 billion. This indicates growing investor commitments despite the overall decline in trading volume.

Risk appetite remains cautious, as evidenced by the Alternative Fear and Greed Index. This widely followed metric of investor sentiment edged upward slightly to 30 points, remaining entrenched in the “Fear” category. While this represents modest progress from the previous day’s reading of 27, the sentiment remains below last month’s score of 44, reflecting persistent wariness among market participants.

Outlook for Cryptocurrencies

The cryptocurrency market seems to be entering a phase of reduced volatility and gradually improving sentiment in the wake of sharply declining liquidation volumes. However, the mixed trading activity and subdued risk appetite suggest that investor confidence remains fragile. The trajectory of major assets like Bitcoin and Ethereum in the coming days will likely depend on their ability to sustain recovery momentum while navigating broader macroeconomic trends. For now, market participants appear cautiously optimistic but are still awaiting stronger signals to fully re-engage.