92% of all crypto ‘longs’ liquidated yesterday after Bitcoin fell to $43,000

Crypto traders took some of their biggest hits in recent times as a sudden purge across the crypto market saw $3.7 billion worth of trading positions liquidated, data from multiple sources showed.

‘Liquidations,’ for the uninitiated, occur when leveraged positions are automatically closed out by exchanges/brokerages as a “safety mechanism.” Futures and margin traders—who borrow capital from exchanges (usually in multiples) to place bigger bets—put up a small collateral amount before placing a trade.

In traderspeak, ‘longs’ occur when investors are betting on prices of a certain asset to rise, while ‘shorts’ occur when they are betting against that asset. 

Who got hit and where?

Yesterday’s purge, unsurprisingly, meant $3.42 billion worth of longs alone were liquidated—accounting for over 92% of all crypto futures positions.

Of those, degen platform Bybit took on $1.3 billion worth of liquidations alone. It was followed by Huobi ($836 million), Binance ($795 million), OKEx ($400 million), and Deribit ($115 million).

Overall, $1.4 billion worth of Bitcoin positions were liquidated, $928 million worth of Ethereum positions were liquidated, and $223 million worth of XRP positions were liquidated. These were followed by Solana, Cardano, and Dogecoin, which each saw $98 million, $84 million, and $80 million worth of liquidations respectively, as data from on-chain analytics tool Bybt shows.

Alameda Research co-CEO Sam Trabucco pointed out the move was almost like clockwork in a tweet, stating similar data in futures premia and open interest preceded the previous crypto crash.

“The set-up is the same every time: futures are at really high premia; this suggests aggressive buying, OIs going up; this suggests the buyers are opening positions, number go up: this means there’s *net* buying,” he said, adding:

“And “number go up” important sets up the opportunity for people to buy at “high” prices. This matters because of the next stage of the set-up: – number go down”

Today was the first time I’ve been woken up because the market was moving in a while — it’s the biggest move we’ve seen in months! What happened?

A thread about history. pic.twitter.com/o0ojE0kVLJ

— Sam Trabucco (@AlamedaTrabucco) September 8, 2021

All in all, over 376,000 individual trading accounts were affected by the carnage, ranging from exchanges from Binance to FTX, to Bitfinex. A move of such intensity was previously seen in early-2021 as Bitcoin and other cryptos reached their all-time highs—coming as a sudden shock for some.

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