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Traders in Dogecoin and Solana are suffering big losses as the crypto market sees $400 million in liquidations

Following hawkish statements from the US Federal Reserve, crypto futures traders lost nearly $400 million on Wednesday, as most cryptocurrencies fell below support levels.

Following over a billion dollars in losses from liquidations on Jan. 21 and $470 million on Jan. 22, Wednesday’s results were the third-highest of 2022. Bitcoin dropped from $47,000 to $42,500 at the time.

Image : Wednesday saw over $400 million in liquidation losses. (Coinglass)

When a trader’s leveraged position is forced closed by an exchange as a safety mechanism due to a partial or entire loss of the trader’s initial margin, liquidations occur. This is most common in futures trading, which solely tracks asset prices rather than spot trading, which involves traders owning the actual assets.

Outside of bitcoin and ether, futures tracking Solana’s SOL and Dogecoin’s DOGE witnessed a combined $40 million in liquidation losses, the biggest among major cryptocurrencies. Meanwhile, the GMT tokens of StepN, a month-old crypto project, were an odd arrival on the list, losing $9 million.

In the previous week, DOGE and GMT were among the top gainers. DOGE prices rose on expectations that Elon Musk’s appointment to the Twitter board of directors would be a favorable stimulus for Dogecoin’s growth, while traders flocked to Stepn because of its innovative step-to-earn approach.

DOGE dropped steeply after a rise earlier this week. (TradingView)

Bitcoin futures have lost $92 million, the largest of any cryptocurrency, followed by ether futures, which have lost $64 million. On Thursday, the losses continued throughout Asian hours. That’s, with over $40 million in liquidations already recorded at the time of writing.

According to data from the tracking tool Coinglass, the majority of liquidations occurred on the cryptocurrency exchange Binance. Of course, with approximately $133 million in losses. Traders on the OKX and FTX exchanges lost the most money, with losses of $100 million and $68 million, respectively.

Following a bitcoin dip to support at $45,000 on Wednesday, 83% of all traders were long. Then, or betting on higher crypto prices. However, the asset has dropped another 5% since then, and it now trades at $43,500 at the time of writing.

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Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.