Crypto Market Cap Drops 16% Overnight as Ether Futures Lead $1.2B in Liquidations

The last 24 hours have seen one of the steepest losses in the cryptocurrency market.

According to several sources, ether futures led to liquidation losses in the last 24 hours, with crypto markets losing almost 16 percent of their overall valuation.

In the crypto market, liquidations occur when a trader lacks sufficient cash to satisfy a margin call – or a demand from the exchange for additional collateral to keep the trading position funded. Because of the extreme volatility of assets, they’re especially common in high-risk trading. As a result, both margin and futures trading are affected.

Traders of ether futures lost $333 million due to liquidations as the asset dropped 22% to below $1,900. This was the most significant loss among all cryptos, with bitcoin futures losing $330 million and futures tracking Terra’s LUNA losing $130 million.

Ether dropped some 20% in the past 24 hours. (TradingView)

In the last 24 hours, losses have surpassed $1.2 billion, the biggest this year. They came as prominent cryptocurrencies experienced severe drops: Bitcoin plummeted 11%, BNB Chain’s BNB plunged 26%, and Solana’s SOL fell 37%. In addition, Terra’s LUNA has dropped out of the top 10 cryptos by market capitalization to 81st place, losing 96% in the last 24 hours to around 40 cents.

OKX had the most liquidations of all crypto exchanges, with $393 million, followed by Binance with $389 million and Bybit with $155 million.

Despite the overall market’s downturn earlier this week, data showed that 83 percent of all futures were long or betting on rising prices. In addition, the loss of the peg between the US dollar and terraUSD (UST), a stablecoin created by Terraform Labs, caused a cascade effect on decentralized finance (DeFi) services based on Terra.

Contagion from the UST likely expanded to the broader market, fueling a decrease in crypto values, combined with inflation fears and bad CPI data.

Meanwhile, open interest – or the number of unresolved futures contracts – has dropped 10% in the last 24 hours, signaling that traders have reduced liquidity and vacated positions in expectation of increased volatility.

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