Bitcoin (BTC) volatility hits options markets with $175M in liquidations, $1B in open interest wiped out

The sudden volatility in Bitcoin (BTC) caused long and short futures traders to suffer, with $175 million worth of positions liquidated and $1 billion of open interest liquidated in the last 24 hours -dollars were effectively wiped out.

Longs are bets on higher prices while shorts are bets on lower prices. A liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This happens when a trader does not have sufficient funds to keep the trade open.

Large liquidations can signal the local top or bottom of a steep price move, which can allow traders to position themselves accordingly.

Crypto exchange OKX had over $52 million in bitcoin futures liquidations on its platform, followed by counterparts Binance and OKX with $38 million and $29 million, respectively.

The largest single liquidation order occurred on BitMEX, a $6 million Bitcoin/Tether trade.

Bitcoin surged above $30,000 in the Asian evening hours on Wednesday on hopes of favorable monetary policy in the US, some market analysts have opined. That move didn’t last long, however, as sudden selling propelled prices to the $27,700 level after the US market opened.

Rumors of bitcoin sales from the US government and beleaguered crypto exchange Mt.Gox may have further impacted prices as prices fell as low as $27,200. However, it was later confirmed that such data alerts were misclassified by the on-chain firm Arkham Intelligence, which originally sent out the alerts.

Bitcoin has since recouped yesterday’s losses to regain the $29,000 level on Thursday in the Asian morning hours. About $200 million in open interest has been added, data from Coinglass shows.

Crypto majors have been following Bitcoin and are slightly recovering at the time of writing. Ether (ETH) surged above $1,900, Dogecoin (DOGE) hit 8 cents, while Cardano (ADA) is up 3.8% over the past 24 hours, erasing almost all of yesterday’s decline losses.

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