Crypto liquidations: over $1 billion in bullish positions wiped out in 24 hours

The bulls are footing the bill. Friday, November 6 in the morning, bitcoin (BTC) fell towards $76,100, after the AI ​​crash on Wall Street. In 24 hours, derivatives platforms automatically closed more than $1.1 billion in contracts that were counting on an increase. Bitcoin ETFs did not play the role of rescuer.

The key points of this article:

More than $1.1 billion in bullish bets were liquidated on crypto derivatives in 24 hours.

Bitcoin lost 5.2% over the day, carried away by the crash of stocks linked to AI.

Spot Bitcoin ETFs lost $430.2 million on Thursday, November 5, without absorbing the sales.

The market is pricing in a 70% chance of a Fed rate hike in December ahead of the jobs report.

The fall starts from Wall Street

Thursday, November 5, the Nasdaq fell 5.5%, its worst session in more than a year, and the sale then spread to Asia, as far as Seoul.

The shock is starting from American politics. With Congress entirely in the hands of Democrats, investors fear a brake on the construction of data centers that are fueling the race for AI. Crypto followed suit.

In this stalling market, leverage has done damage. Positions automatically closed weighed $1.27 billion in 24 hours, according to data collected by CoinDesk.

The wave carried away almost exclusively bullish positions. Those who were counting on a decline emerged almost unscathed from the episode.

The diagnosis is shared by professionals: Carlos Guzman, vice-president of research at GSR, summarizes the session:

“A decline in risk appetite, amplified by leverage. »

Should we fear a new stunt?

On derivatives, leverage allows you to bet $1,000 as if you had ten times as much. As long as the price rises, the gains are multiplied, but as soon as it drops, the stake no longer covers the losses.

For example, with a leverage of ten, a drop of around 10% is enough to wipe out the stake, and the platform then closes the position at the market price. The bitcoin holder has not sold anything and keeps his coins.

The circle can be self-sustaining. Each closed position dumps a sell order onto the market, and this pressure pushes the price back, which in turn triggers new closes.

In the spot market, support was overdue, as US spot Bitcoin ETFs lost $430.2 million on Thursday, November 5, according to CoinDesk.

These funds, launched in January 2024, had nevertheless established themselves as the main buyer on the market. Nearly 200 million dollars had already left them at the start of the week. Bitfinex analysts warned that “sustaining this rebound would require real spot demand.”

Rates are adding to the pressure, and the October employment report, published Friday, November 6, will set the tempo for the day.

Economists expect between 59,000 and 65,000 job creations, double that of September.

The markets are already pricing in a 70% probability of a Fed rate hike in December. A stronger-than-expected employment figure would strengthen this scenario, and the pressure would then fall on cryptos.

For his part, Jasper De Maere, trader at Wintermute, places the first support at $73,000, and sees it even lower if the fall continues. The recovery would only be confirmed, according to him, after the return above $80,000.