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As reported by Coinglass, the wider cryptocurrency markets experienced approximately $352 million in liquidations within a 24-hour period.
- Exchanges noted over $33 million in liquidations related to AI chip stocks, primarily affecting leveraged long positions.
- The SOXL contracts were the hardest hit, with liquidations amounting to $13.05 million, followed by losses in SanDisk and Micron.
- Bitcoin was trading close to its $80,862 liquidation-risk level, while Ethereum was near its own $2,354 mark.
Bitcoin (BTC) was trading slightly above a significant cluster of leveraged long positions on Sunday. The day before, traders invested heavily in AI chip stocks suffered losses totaling about $33.8 million on crypto exchanges. This liquidation mainly affected contracts linked to Micron (MU), SanDisk (SNDK), and SK Hynix (SKHY), coinciding with the 39th anniversary of the Black Monday crash.
Liquidations In AI Chips Amidst Long Position Destabilization
These losses were evident in perpetual futures contracts, which are designed to track stock prices without an expiration date. Despite the closure of Wall Street, traders continued making moves, taking advantage of continuous trading options provided by platforms like Binance and OKX.
A liquidation event occurs when an exchange closes a leveraged position that can no longer meet margin requirements. The majority of liquidations on Saturday involved long positions, betting on increasing prices.
According to CoinGlass, the most significant losses occurred with the Direxion Daily Semiconductor Bull 3X Shares (SOXL), which aims to triple the daily performance of a semiconductor index. These contracts faced $13.05 million in liquidations over a 24-hour span, with the largest single position liquidated valued at approximately $3.17 million.
Data from CoinGlass indicated that SOXL’s contract rose by over 8.5% during the day, while contracts for Micron and SK Hynix each increased more than 7% before later recovering from their lows.
Long Positions Account for Most Losses
Following SOXL, SanDisk suffered around $11.98 million in liquidations, with 95% attributed to long positions. Micron’s contracts fell by roughly $4.45 million, predominantly from long positions. SK Hynix’s contracts experienced losses totaling $3.77 million.
CoinGlass also noted that over 4,000 traders had their positions liquidated across five chip-linked contracts, all peaking simultaneously within the same hour on Saturday. Binance accounted for more than half of the liquidations across these contracts.
Bitcoin Approaches a Critical Zone
The losses in the chip sector were part of a broader trend of forced selling. The cryptocurrency market recorded around $352.1 million in liquidations over the last day, marking a 67% increase compared to the previous day. The most significant single liquidation was a $7.27 million short position on Binance’s Direxion Daily Semiconductor Bear 3X Shares (SOXS).
Bitcoin is now trading near its next risk threshold. CoinGlass indicates it was around $80,996, with a long “max pain” level for Bitcoin set at $80,862 within the last 24 hours, just $134 apart. This metric identifies where the largest concentration of leveraged bets may force a closing of positions.
Bitcoin’s price saw a decrease of 0.2% within the past day. Sentiment around BTC on Stocktwits shifted from ‘bearish’ to ‘extremely bearish,’ although discussions surrounding it remained at low levels during this time.
Risks Persist for Leveraged Positions
At this juncture, around $46.39 million in long positions would be liquidated if the price reaches the specified level, based on CoinGlass data. Similarly, short positions are close to $82,493, approximately 1.85% above the existing market price.
Ethereum (ETH) is experiencing a similar scenario, currently trading around $2,372, which is about 0.75% above its long max pain threshold of $2,354, according to CoinGlass. Long positions are estimated to be around $25.98 million, while short positions stand at about $2,451, a rise of around 3.3%.
Monday marks the 39th anniversary of October 19, 1987, when the Federal Reserve reported a drop in the Dow Jones Industrial Average by 508 points, equivalent to 22.6%.
Additionally: ETH Positioned ‘In the Middle of Nothing’ as October Winds Down
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