plummet of Bitcoin to $26.1k was a massive liquidation event

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The recent plummet of Bitcoin to $26.1k was a massive liquidation event, underlined by significant changes in the cryptocurrency’s perpetual funding rate and open interest.

The perpetual funding rate, a mechanism used by exchanges for perpetual futures contracts, which usually sees long positions periodically pay short positions when positive, has shifted into the negative terrain.

This change implies a reversal of roles where short positions periodically pay long positions, a clear indicator of market anxiety.

Simultaneously, we witnessed a significant drop in open interest, a measure of the total number of outstanding derivative contracts, such as futures that have not been settled.

There was a striking obliteration of $1B worth of liquidations, resulting in a massive reset. Specifically, around 60,000 Bitcoin open interest contracts were wiped out in the process, a significant percentage of which were associated with leading exchanges like Binance, Bybit, and OKX.


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