Crypto Market Cap Falls 6% Amid $550M in Liquidations

The cryptocurrency market capitalization has declined by 6%, with over $500 million in crypto positions liquidated due to escalating geopolitical tensions in the Middle East.

Geopolitical Tensions Affect The Crypto Market

The overall crypto market capitalization has fallen by 6%, reaching $2.24 trillion as of this moment, amidst rising geopolitical tensions between Iran and Israel. Iran launched ballistic missiles targeting key Israeli sites yesterday, resulting in a volatile market as Israel promised retaliation in the days ahead.

According to CoinGlass data, over $556 million in futures contracts were liquidated within the last 24 hours. Major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) experienced liquidations amounting to over $143 million, $119 million, and $20 million, respectively.

Of the $556 million in futures contracts liquidated, a remarkable 86.6% – or $482.2 million – were long positions, while the rest, 13.4% – or $74.6 million – represented short positions. In the last 24 hours, a total of 167,802 traders were liquidated, with the largest single liquidation order on Binance’s BTCUSDT pair reaching $12.6 million.

Binance contributed to 49.1% of the total liquidations, totaling $273.4 million. Following Binance were OKX, Bybit, and HTX, which saw liquidations of $182.6 million, $43.3 million, and $40.2 million, respectively.

For those unfamiliar, crypto liquidations happen when a trader’s position is automatically closed by an exchange due to insufficient funds to meet potential losses or margin requirements.

Liquidations typically occur in leveraged trading, where traders borrow capital to expand their position size. If the market moves unfavorably against them beyond a specified limit, the exchange liquidates its assets to prevent further losses.

Significant liquidations – as observed in the previous 24 hours – signal high market volatility, often prompted by abrupt price shifts. Such instances indicate that numerous traders with leveraged positions were taken by surprise by these volatile fluctuations, leading to mandatory selling or buying. This can further destabilize the market as liquidations amplify price variations.

It is noteworthy that the majority – about 83% to 99% – of these liquidations were long positions, suggesting that traders anticipated prices to continue rising into October. Traditionally, October has been regarded as a bullish month for Bitcoin.

Optimistic Outlook Persists In The Market

The recent decline in digital asset values means October has not begun with the anticipated momentum the bulls hoped for. Historically, since 2013, Bitcoin has only experienced negative returns in October on two occasions, making it a typically bullish month for cryptocurrencies.

Many crypto analysts express a positive forecast for October and the fourth quarter of 2024. For example, a recent analysis by 10x Research highlighted that there are “exceptionally high” prospects for a crypto rally before the year concludes.

Additionally, a report by Bernstein suggests that a win for Republican presidential candidate Donald Trump in the upcoming November US elections could drive Bitcoin to potentially reach $90,000 in Q4 2024. As of now, BTC is trading at $61,448, reflecting a 2.5% decrease over the past 24 hours.