This year has seen a tremendous increase in Bitcoin liquidations. With the market oscillations throughout the year, there have been billions of dollars in liquidations along with long and short positions. Given the enormous number of liquidations in a short period of time, investors have frequently been greedy and have had to cope with the consequences of their impatience.
So far in 2021, there have been a handful of notable liquidations. One was during the September 7th crash, which resulted in hundreds of millions of dollars in liquidations. This article examines the liquidations of 2021 and what they have amounted to as the year concludes.
While financing rates, futures basis, and leverage have been big themes in the market this year, none have come close to illustrating how much risk traders faced this year. The liquidation data take care of this since they indicate that bitcoin traders had a highly dangerous year, taking some enormous leaps that left them burned in the end.
According to Arcane Research, more than $100 billion in liquidations will be in 2021 alone. This varies between lengthy and short liquidations, with the latter suffering the lion’s share of the hit.
The total value of long liquidations for the year was $84.45 billion. As a result of several crashes, long traders suffered significant losses in the market. The bullish trajectory that the digital currency had maintained for the majority of the year and the belief that bitcoin will continue on this trend were the primary motivators.
Short liquidations produced far fewer results than extended liquidations. At $46.89 billion, this is half the cost of the protracted liquidations. Nonetheless, it is large, indicating that short traders were also hurt by market volatility, but not to the same extent as long traders.
Exchanges with the Highest Liquidity
Some exchanges lost more than others as a result of the bitcoin liquidations that occurred in the crypto market. The main reason is that these exchanges are larger and attract more traders who place more trades on the platform. When liquidations occur, they record the biggest quantities in comparison to others. Binance and ByBit are examples of this.
The majority of liquidations occurred on these two exchanges, across both longs and shorts. Binance, the world’s largest crypto exchange, saw the most of this, with ByBit coming in a close second.
These liquidation tendencies are likely to last through 2022. The reason for this is that more traders are establishing higher risk tolerances in the hopes of making money through trading. With the price of bitcoin remaining highly volatile, many of these traders will be liquidated, regardless of whether they are long or short in the market.
