In the last 24 hours, on-chain liquidations in decentralized finance (DeFi) protocols exceeded $350 million, according to data from Parsec Finance. The increase in liquidations is attributed to market volatility and sell-offs in the cryptocurrency market overall. Bitcoin (BTC) falling below 50 thousand dollars and Ethereum (ETH) falling to 2 thousand 200 dollars triggered this wave of liquidation.
Liquidations in DeFi Protocols Reach Annual Peak
Liquidations in DeFi protocols on Ethereum have reached a new annual high. According to data from Parsec Finance, more than $350 million in positions were liquidated in the last 24 hours alone. This situation is seen as a result of sudden downward movements in the markets.
The bulk of the liquidations were concentrated in three main assets. ETH collateral took the biggest hit with $216 million in liquidations, followed by wrapped staked ETH (wstETH) with $97 million and wrapped Bitcoin (wBTC) with $35 million. The liquidations of these assets had a particularly big impact on lending protocols.
This wave of liquidations is attributed to the sudden price movements and general sell-off in the cryptocurrency market. Bitcoin’s drop to its lowest level since February and Ethereum’s six-month bottom have accelerated liquidations in DeFi protocols.
Situation in Central Exchanges
Centralized exchanges have also seen major liquidations in the last 24 hours. According to CoinGlass data, more than $1 billion worth of futures positions were liquidated. Approximately $760 million of these liquidations were long-term leveraged positions. Ethereum and Bitcoin investors were hit hard with more than half a billion dollars worth of liquidations.
The reasons behind this wave of liquidations include sudden price drops in the market, leveraged positions of investors, and general market conditions. Sudden declines lead to forced liquidation of leveraged positions, creating greater selling pressure.
The impact of the liquidation wave on the markets may vary depending on the future actions of investors. If the volatility in the market continues, more liquidations and price fluctuations can be expected. This situation once again highlights the importance of risk management in DeFi protocols.
Liquidations in DeFi protocols highlight how quickly market conditions can change and the importance of risk management strategies for investors. The current volatility in the cryptocurrency market is forcing investors to act with caution and awareness.
