Crypto-tracked futures have experienced significant liquidations, surpassing $550 million in losses within the past 24 hours. This comes as meme coins, such as dogecoin (DOGE), shiba inu (SHIB), and pepecoin (PEPE), accounted for approximately $90 million in evaporated bets alone. The surge in liquidations follows a massive rally in the cryptocurrency market, which has seen bitcoin (BTC) and ether (ETH) reach historic highs.
Bitcoin’s Volatility Sparks Price Action
Bitcoin and ether briefly surpassed the $68,000 and $3,700 levels, respectively, as the market continued to be fueled by multiple catalysts. However, profit-taking began in the early Asian hours, causing bitcoin to drop to as low as $64,500 before recovering to the $67,000 level. Despite the volatility, the broader CoinDesk 20 index (CD20) rose by over 6%. Long positions, or bets on higher prices, experienced losses of over $240 million, while short positions, or bets on lower prices, saw $320 million in evaporated positions.
Meme Coins Experience Unusual Liquidations
In a highly unusual move, futures tracking meme coins such as DOGE, SHIB, and PEPE collectively lost $90 million across exchanges. Bullish bets on DOGE reached a lifetime high last week, contributing to its 110% weekly move. Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to a loss of initial margin. Large liquidations can signal the local top or bottom of a steep price move, providing valuable information for traders.
Leveraged Bets and Funding Rates
As bitcoin approaches its lifetime highs at $69,000, leveraged buyers are expected to increase their positions. Data shows that leveraged bets on crypto futures have already reached over $66 billion in the past week. Additionally, funding rates on some tokens have skyrocketed to over 100% annualized. Funding refers to the amount traders pay when they borrow additional money to place larger trades. This increase in leverage and funding rates indicates a growing appetite for risk in the market.
SHIB Tokens and Bearish Signals
Analysts are closely monitoring the unusually large moves in SHIB tokens, as meme coin outperformance has historically signaled local tops in the bitcoin market. The speculative froth surrounding meme coins often leads to market corrections. Traders and investors are cautious as they navigate the volatile cryptocurrency landscape.
Future Expectations
Traders widely anticipate bitcoin to surpass its lifetime highs, especially with the upcoming halving event in April. Furthermore, there are expectations for the approval of a spot ether exchange-traded fund (ETF) in May. These factors contribute to the belief that leverage will continue to increase in the coming days. Crypto fund QCP Capital stated, “Leveraged buyers will likely not relent until we break all-time highs, which could be any time now.”
The recent liquidations and price volatility serve as a reminder of the risks associated with trading cryptocurrencies. As the market continues to evolve, it is crucial for traders to stay informed and exercise caution when making investment decisions.
