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The cryptocurrency market just went through its biggest liquidation of this bull run.
On Dec. 9, the cryptocurrency market saw $1.552 billion worth of liquidations within 24 hours, according to data provided by CoinGlass. Long positions were responsible for $1.38 billion of total liquidations, while liquidated short positions accounted for $136.7 million.
Bitcoin (BTC) liquidations alone were worth $163.4 million, while Ethereum (ETH) $204.7 million. In a subsequent X post, CoinGlass wrote that in the 24 hours before the post $1.71 billion were liquidated:
“The biggest long liquidation of this bull cycle so far.
In the past 24 hours , 569,214 traders were liquidated , the total liquidations comes in at $1.71 billion.”
The details
The total cryptocurrency market cap shrunk from Dec. 9’s high of $3.71 trillion down to $3.35 trillion at the time of writing — shrinking by 9.7%. This is equivalent to $360 billion leaving the market.
Large liquidations like the one that just took place are often described as a “leverage flush” by market observers and are viewed as a sane cyclical occurrence, making the market more stable. Large amounts of leveraged positions in a market result in forced sellers or forced buyers during liquidations.
A large volume caused by forced buyers or sellers might significantly amplify market movements and volatility. The last significant leverage flush took place earlier this month, when liquidations across all exchanges reached over $1.1 billion. Reports at the time indicated that this was the largest crypto liquidation event since December 2021.
Market data shows that Bitcoin is trading at about $95,500 at the time of writing. Over the last 24 hours, the coin lost 2.56% of its value and over the last seven days it gained about 0.04%.
The Crypto Fear & Greed Index, a multifactorial measure of crypto market sentiment, currently indicates a level described as “extreme greed.” The index stands at 78, indicating that the crypto market is now overrun by greed. With such scores, the instrument warns of a possible imminent correction:
“When Investors are getting too greedy, that means the market is due for a correction.”
