Ether futures led the liquidation losses in the last 24 hours as crypto markets lost over 16% of their total capitalization, data from multiple sources show.
Liquidations in the crypto market occur when a trader does not have enough funds to fund a margin call - or a call for additional collateral required by the exchange to keep the trading position funded. They are particularly common in high-risk trading because of the high volatility of assets. They occur in both margin and futures trading.
Traders of Ether futures lost $333 million in liquidations when the asset fell 22% below the $1,900 mark. This was the highest loss among all cryptocurrencies, with bitcoin futures losing $330 million and futures tracking Terra's LUNA losing $130 million.
The losses totaled over $1.2 billion in the last 24 hours, the highest this year. These losses occurred as major cryptocurrencies plummeted: Bitcoin fell 11%, BNB Chain's BNB lost 26%, and Solana's SOL lost 37%. Terra's LUNA fell out of the top ten cryptocurrencies by market capitalization to 81st place - it dropped 96% in the last 24 hours to below 40 cents.
Crypto exchange OKX recorded $393 million in liquidations, the highest total of all crypto exchanges, followed by Binance with $389 million and Bybit with $155 million.
The data shows that 83% of all futures trades were long positions, i.e. bets on higher prices, despite the weakness of the overall market earlier this week. Much of the systemic risk stemmed from terraUSD (UST), a stablecoin issued by Terraform Labs, which lost its peg to the U.S. dollar and triggered a cascading effect on decentralized financial platforms (DeFi) running on terra.
In addition to inflation fears and weak consumer price index data, contagion related to UST has likely spread to the broader market, triggering a decline in crypto prices.
Meanwhile, data shows that open interest - or the amount of unsettled futures contracts - has fallen by 10% in the last 24 hours, meaning traders have been withdrawing liquidity and exiting positions in anticipation of further volatility.