The recent resolution between Binance and the U.S. Securities and Exchange Commission (SEC) triggered a pronounced bear market, resulting in substantial liquidations.
Overnight volatility directly impacted various cryptocurrencies, leading to the liquidation of a significant portion of leverage, especially in Bitcoin futures markets.
Binance’s agreement with the SEC, addressing multiple allegations, had a pronounced effect on the market, particularly for futures traders anticipating continuous growth.
Data from CoinGlass reveals that in the last 24 hours, positions in perpetual cryptocurrency futures worth $227 million were liquidated on various platforms. Close to 80% of these liquidations were associated with bullish positions.
Bitcoin, as the leading cryptocurrency, experienced liquidations exceeding $65 million in futures markets during this period. This event ranks among the highest-volume liquidation events in 2023 so far.
The impact extended beyond Bitcoin, affecting both long and short positions, with over $67 million in liquidations of bullish and bearish positions in the last 24 hours.
Futures traders of Ether (ETH) incurred losses totaling $27 million, while Solana (SOL) traders faced $10 million in liquidations. BNB, linked to the Binance ecosystem, recorded comparatively smaller liquidations, reaching $6 million.
Among exchanges, Binance led in terms of liquidations, totaling $100 million, followed by OKX with $62 million. Liquidations occur when a platform forcefully closes a leveraged position due to the partial or total loss of the trader’s initial margin, typically when the trader cannot meet margin requirements.
Large-scale liquidations can be interpreted as possible indicators of a local top or bottom in a significant price movement, providing traders with information to adjust their positions accordingly.
This data is valuable for traders as it serves as a signal that leverage is effectively being washed out from popular futures products, indicating a short-term reduction in price volatility.
It is crucial to note that Binance faced criminal charges related to violations of sanctions and money-transmitting laws. The agreed-upon settlement required Binance to pay a substantial sum of $4.3 billion, marking one of the largest penalties ever obtained by the U.S. from a corporate defendant.