The cryptocurrency market crashed hard on Thursday, with most major coins falling by double-digit percentages. The price of the privacy-centric altcoin Monero fell the most, over 20%, after the community revealed that the coin’s core developers had liquidated $3.72 billion worth of the coin to cover costs. While the price of Monero has since recovered, it is still down by nearly 10%.
Crypto traders woke up today to a deep pullback of $3.7 billion in the market, according to data from market tool Bybt.
3.72 billion and 341,347 traders were liquidated in 24 hours.
With cryptocurrencies, there’s never a dull moment pic.twitter.com/bWdBi0sj2u
– Lex Moskovski (@mskvsk) May 13, 2021
The reset comes shortly after Ethereum creator Vitalik Buterin dumped his Petcoins and Tesla stopped paying for its cars in bitcoins. Both measures have sparked controversy and criticism from the cryptocurrency industry.
More than 340,000 traders were liquidated, with the largest liquidation order for cryptocurrency exchange Huobi – bitcoin transactions worth $38.7 million.
For the uninitiated: Liquidations occur when traders borrow excess capital from brokers/exchanges (i.e. on margin or futures) to make large bets on the assets they trade. You pay a fixed fee, and the exchanges close these positions at a predetermined price when the trader’s deposit equals the loss on that position. Such a transaction shall be deemed to be closed.
Traders were likely over-credited in the days leading up to yesterday, meaning that a small drop in cash markets resulted in the liquidation of some accounts, which was followed by a cascading effect of further price drops and the liquidation of even more accounts.
Liquidation of the cryptocurrency and where
Of the $3.72 billion in total liquidations, $3.32 billion (89%) came from long traders or accounts betting on rising asset prices, according to Bybt. Of this amount, Huobi alone accounted for $1.1 billion, Bybit futures for nearly another billion, and Binance for $500 million in liquidations.
For example, $1.95 billion of all liquidations came from bitcoin transactions, $629 million from Ethereum, $195 million from Filecoin and more than $137 million from Dogecoin, a memcoin that has become the fifth largest cryptocurrency in the world.
Meanwhile, at the time of publication, the market is showing some signs of recovery. Bitcoin, Ethereum and Binance coins appear to have found a low at $50,900, $3,980 and $625 respectively, after dropping nearly 10% on average over the past 24 hours.
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