The crypto market capitalization has fallen 6%, with more than half a billion crypto bets liquidated amid escalating geopolitical tensions in the Middle East.
Tensions in the Middle East are roiling the crypto market
The total cryptocurrency market cap has fallen 6%, falling to $2.24 trillion at the time of writing, as geopolitical tensions between Iran and Israel escalate. Yesterday, Iran launched ballistic missiles at key Israeli locations, keeping the market volatile as Israel vowed to retaliate in the coming days.
According to facts of CoinGlass, more than $556 million worth of futures contracts have been liquidated in the past 24 hours. Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) saw liquidations worth more than $143 million, $119 million, and $20 million, respectively.
Of the $556 million worth of liquidated futures contracts, 86.6% – or $482.2 million – were long positions, while the remaining 13.4% – or $74.6 million – were shorts. A total of 167,802 traders were liquidated in the past 24 hours, with the largest liquidation order being on Binance’s BTCUSDT pair worth $12.6 million.
Binance was responsible for 49.1% of the total liquidations, with $273.4 million liquidated on the platform. It was followed by OKX, Bybit and HTX, with liquidations of $182.6 million, $43.3 million and $40.2 million respectively.
For the uninitiated, crypto liquidations occur when a trader’s position is automatically closed by an exchange because he does not have enough money to cover potential losses or margin requirements.
Liquidations usually occur in leveraged trading, where traders borrow money to increase their position size. The exchange liquidates its assets if the market turns against them after a certain point to prevent further losses.
Large liquidations – such as those seen in the last 24 hours – indicate high volatility in the market, often caused by sudden price drops or spikes. They may suggest that many traders with leveraged positions were caught off guard by these volatile moves, leading to forced selling or buying. This can further exacerbate market instability as liquidations cause cascading effects on prices.
It is worth highlighting that the majority – ranging from 83% to 99% – of these liquidations were long positions, indicating that traders expected asset prices to continue rising into October. Historically, October has been one of the most bullish months for BTC.
The bullish sentiment continues in the market
With the recent decline in digital asset prices, October hasn’t seen the beginning of the bulls hoped for. Since 2013, October has only produced negative returns on BTC twice, making it a historically bullish month for digital assets.
Several crypto analysts maintain an optimistic outlook for October and the fourth quarter of 2024, according to a recent report from 10x Research noted that there are “exceptionally high” chances of a crypto rally before the end of the year.
This also includes a report by Bernstein stilt that a victory for Republican presidential candidate Donald Trump in the November US presidential election could propel Bitcoin to a high of $90,000 in the fourth quarter of 2024. BTC is trading at $61,448 at the time of writing, down 2.5% in the past 24 hours.
Featured image from Unsplash.com, charts from CoinGlass.com and TradingView.com