Wednesday Newsletter

Explore the latest trends, gain valuable insights, and stay informed in the dynamic cryptocurrency ecosystem.

12 June 2024

$190M Leveraged Positions Liquidated Amid Crypto Downturn

The crypto market faced significant turbulence on June 11, resulting in the liquidation of nearly $200 million in leveraged positions, just days after a $400 million liquidation event on June 7. Bitcoin (BTC) dropped 2.5% from a daily high of $69,547 to a low of $66,018, while Ether (ETH) saw a steeper decline of 2.58%, falling to $3,500.

According to CoinGlass, a crypto analytics firm, over the past 24 hours, 83,912 traders were liquidated, totaling $190.97 million in losses. The largest single liquidation order occurred on OKX, with an ETH/USDT swap worth $5.21 million.

Liquidation occurs when a trader fails to meet margin requirements or exhausts funds needed to maintain an open position, resulting in a partial or total loss of the initial margin.

Bitcoin and Ether Traders Hit Hardest

Bitcoin traders were the most affected, with $46.9 million in liquidations, including $36.8 million in long positions and $14.07 million in short trades. Ether traders followed with $41.0 million in liquidations, comprising $31.3 million in longs and $9.68 million in shorts.

This wave of liquidations follows the crypto market’s significant $400 million liquidation event on June 7.

Market Braces for FOMC and CPI Data

The recent market correction and subsequent leveraged trade liquidations are closely tied to the upcoming release of the May Consumer Price Index (CPI) report and the Federal Open Market Committee (FOMC) meeting on June 12. Historically, CPI data releases and FOMC rate changes have prompted volatility in the crypto market as investors seek to mitigate risk. Currently, the 30-day correlation between the crypto market and U.S. equities is at its highest since 2022.

Typically, a rise in the CPI leads to a decline in Bitcoin prices. When essential goods become more expensive, consumers have less discretionary income available for investment.

Reports indicate that the FOMC is likely to keep the interest rate unchanged, maintaining the benchmark lending rate at 5.25%–5.50%. Meanwhile, CPI data is expected to stay within the 0.1% to 0.3% range.