13 Sep 2021
The highly anticipated El Salvador Tuesday saw more than $1 billion worth of bitcoin longs getting liquidatedThe legal tender Tuesday did indeed lead the markets to move. On Tuesday, September 7th, more than $1.2 billion worth of longs got liquidated during the crash.
Anticipations were high as we approached September 7th, evident by the rising basis and funding rates mentioned in last week’s report.As we’ve seen so often this year, crypto traders are not shy from adding significant leveraged exposure when they have conviction, leading the market exposed for significant liquidation cascades when the market turns sour.On September 7th, at least $1.2 billion worth of longs in bitcoin futures and perpetuals were liquidated as bitcoin crashed from $50,000 to $42,000 in 30 minutes. Approximately 50% of these liquidations originated from Bybit.The Sept 7th liquidation data is likely an underestimation and is not directly comparable to the $4.87 billion of April 19th and $3.19 billion of May 19th. This is caused by Binance adjusting its API recently, leading the liquidation data from the exchange to be underestimated. In the next slide, we examine the changes in the open interest across the various markets, illustrating how Binance and Bybit took the most severe hit amid the crash.While this slide has focused on the bitcoin futures, the crash affected the entire market. Overall, more than $3.2 billion worth of longs in various crypto futures were liquidated on Sept 7th.This incident is yet another reminder to avoid the temptation of making high leveraged bets on the volatile crypto markets.