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Crypto Market Decline Erases $190 Million in Leveraged Positions Amid CPI Report Anticipation

ByDayne Lee

Jun 14, 2024

Crypto Market Decline Erases $190 Million in Leveraged Positions Amid CPI Report Anticipation

On June 11, the cryptocurrency market witnessed significant declines, with Bitcoin and Ether leading the downturn. Bitcoin dropped 2.5% from its daily high of $69,547 to a low of $66,018. Ether, the second-largest cryptocurrency by market capitalization, experienced a slightly larger percentage drop, falling 2.58% to $3,500. These sharp declines triggered widespread liquidations in leveraged trades, erasing nearly $200 million from the market.

Extensive Liquidations Amid Market Correction

Data from crypto analytics firm CoinGlass revealed that over the past 24 hours, 83,912 traders were liquidated, totaling $190.97 million in losses. The largest single liquidation event occurred on the OKX exchange, involving an ETH/USDT swap valued at $5.21 million.

Total Traders Liquidated83,912
Total Liquidations$190.97 million
Largest Single Liquidation$5.21 million (ETH/USDT swap on OKX)

Liquidations in leveraged trading happen when a trader fails to meet the margin requirements or runs out of funds to maintain their open positions. In such cases, the exchange automatically closes the trader’s positions to prevent further losses, often resulting in a total or partial loss of the trader’s initial margin. This is a common occurrence in highly volatile markets, where price swings can quickly erode the margin balance.

Bitcoin and Ether Traders Face Significant Losses

In the recent market sell-off, Bitcoin and Ether traders bore the brunt of the liquidations. Bitcoin traders were hit the hardest, with $46.9 million in total liquidations. Long positions accounted for $36.8 million of these losses, while short positions made up $14.07 million.

Type of PositionLiquidation Amount
Long Positions$36.8 million
Short Positions$14.07 million

Ether traders followed closely, with total liquidations amounting to $41.0 million. Of these, long positions contributed $31.3 million, and short positions totaled $9.68 million.

Type of PositionLiquidation Amount
Long Positions$31.3 million
Short Positions$9.68 million

The recent market correction and subsequent liquidations came shortly after the crypto market experienced a $400 million liquidation on Friday, June 7. These consecutive liquidation events highlight the high volatility and risk associated with leveraged trading in the cryptocurrency market.

Influence of Upcoming CPI and FOMC Meetings

The latest downturn in the crypto market is closely linked to the anticipation of the May Consumer Price Index (CPI) report and the Federal Open Market Committee (FOMC) meeting scheduled for June 12. Historically, CPI releases and FOMC rate decisions have created significant volatility in the crypto markets, as investors react to economic indicators and monetary policy changes.

  • CPI Report: Provides a measure of inflation and consumer price changes.
  • FOMC Meeting: Discusses potential adjustments to the federal funds rate and other monetary policies.

Currently, the correlation between the cryptocurrency market and U.S. equities is at its highest since 2022. This suggests that movements in traditional financial markets are having a more pronounced impact on digital assets. Typically, when the CPI rises, indicating inflation, Bitcoin and other cryptocurrencies tend to decline in value. This is because rising prices on essential goods reduce consumers’ disposable income, leaving them with less money to invest in riskier assets like cryptocurrencies.

Reports indicate that the FOMC is likely to maintain the current benchmark lending rate of 5.25%–5.50%, with no immediate changes expected. Meanwhile, the CPI data is anticipated to show a modest increase, remaining within the 0.1% to 0.3% range. These outcomes could further influence market sentiment and trading behavior in the coming days.

IndicatorExpected Range
FOMC Benchmark Rate5.25%–5.50%
CPI Data Increase0.1% to 0.3%

The recent plunge in Bitcoin and Ether prices and the ensuing liquidations underscore the highly volatile nature of the cryptocurrency market, especially in the context of leveraged trading. As the market braces for the upcoming CPI report and FOMC meeting, traders and investors should prepare for potential turbulence.

Understanding the dynamics of liquidations and the impact of macroeconomic indicators is crucial for navigating the crypto market. As always, careful risk management and awareness of market conditions are key to mitigating the risks associated with leveraged trading.

Featured image credit: Freepik

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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