Cryptocurrency market capitalization fell by an average of 5% as tensions in the Middle East escalated late Monday, negatively impacting growth in risk assets.
Over the past 24 hours, futures contracts related to major altcoins have seen over $450 million liquidated as the decline in bitcoin (BTC) led to losses for major tokens, with some falling as much as 8%.
Data from CoinGlass shows that bitcoin traders betting on higher prices lost more than $140.4 million, while those betting on Ether (ETH) lost $109 million. Smaller altcoins saw more than $98.1 million in liquidations — the highest since July — with memecoin Pepe (PEPE) recording an unusual $10 million in liquidations.
Sui is a special case, when the number of Short liquidations is more than Long, with a total value of $11.86 million.
Liquidation occurs when an exchange is forced to close a trader’s leveraged position due to being unable to meet margin calls. Large-scale liquidations can indicate market extremes, such as panic selling or buying. A series of liquidations can suggest a market turning point, where a price reversal may occur due to an overreaction in market sentiment.
Global stock markets and risk assets like bitcoin took a hit last night as Iran launched a ballistic missile attack on Israel, with Israel threatening retaliation in the coming days. BTC fell as low as $60,300 in its worst start to a bullish month, before recovering to above $61,650 at the time of writing.
The drop was devastating for futures traders, who suffered their worst losses since early August. Data shows that nearly 86% of all futures bets are bullish. Traders are betting on higher prices in the coming weeks as October, known as Uptober, traditionally favors BTC.
Market conditions over the past few weeks, including global monetary policies and political support from the US, point to a continued uptrend, with some traders targeting $70,000 for BTC in the coming weeks.
