Pull the Chain

All was relatively quiet; just a slow trickle of water. The wise know that these are the times to pay attention, because yesterday the market makers pulled the chain and flushed out the overexposed.

• Yesterday, the largest short liquidation in 15 months took place as Bitcoin and Ethereum-based tokens rallied.
• The Block recorded a flush out of nearly $700 million in shorts.
• Approximately 75% of the short liquidations were on FTX, with the rest mostly on OKX, Binance, Huobi and Bybit.
• Short-term price volatility also led to $100 million in long liquidations, as eager beavers tried to cash in on the rolling wave.
• Close to double-digit gains were seen on Ethereum, Cardano, Solana and Dogecoin, with Bitcoin lagging at closer to 4%.
• Despite many contracts being forcibly closed, open interest overall rose by 6.6%.
• This suggests traders are expecting further noticeable price movements in the near future.
• Liquidations had been expected earlier in the month by Glassnode, as Bitcoin’s open interest and leverage ratio spiked higher.
• The broader stock markets also rose yesterday, which is often correlated to crypto token price movements.

If you’re trading futures remember to keep an eye on open interest and the leverage ratio, and the golden rule of using a stop loss to prevent liquidation.