In 24 hours, $1.65 billion in positions were forcibly closed on the crypto market. A wave of liquidations was set off by reports of a Binance hack. 254,258 traders were wiped out of the market.
What is leverage. A trader trades a sum larger than their deposit by borrowing money from the exchange. The larger the leverage, the smaller the loss needed for the position to be closed without asking.
Almost 86% of the total volume is long positions. A long is a bet on the price rising. That means the blow landed on those who expected the rally to continue.
Who got hit harder?
CoinGlass data. Over 24 hours, $1.65 billion in positions were forcibly closed. A liquidation is when the exchange itself closes a leveraged trade because the collateral is no longer enough to cover the loss.
- $1.43 billion - long liquidations, 86.2% of the total volume
- $228.93 million - short liquidations
- $541.58 million - Bitcoin, of which 85.2% longs
- $365.13 million - Ethereum, of which 85.4% longs
- $196.96 million - other assets, the share of longs reached 90.2%
The main venue is Binance. It accounted for $823.48 million, half of the entire market. The largest single liquidation was a BTCUSDT long for $11.09 million, also on Binance.
Why did the market crash?
- Binance hack. The cause of the move was reports of a large-scale attack on the exchange.
- Loss reserve. Binance set aside more than $6.3 billion to cover them.
- Attack mechanism. The company Blockaid revealed the scheme: $2.5 billion was withdrawn from a single wallet.
Price. On October 30, BTC dropped to $76,000, then recovered above $78,000. At the time of publication - $77,480.
What does this mean for a trader?
Sentiment has soured. The fear and greed index fell to 36 points, which is the fear zone. The index is a measure of market sentiment from 0 to 100.
- 38 points - yesterday's value
- 47 points - the value a week ago
Key point: the market was rising on leverage, and one news story wiped it out within hours.
What happens next?
Until leverage cools down, any headline about Binance will move the price more sharply than usual.
- Hack news - the main source of sharp candles in the coming days
- Your own leverage - its size determines how close liquidation is
How prop firms limit a trader's risk is covered in the academy. You can find conditions suited to crypto and this kind of volatility in the challenge calculator.
Did you watch BTC fly to $76,000?
A move of a couple thousand dollars in BTC overnight - and a quarter of a million people were wiped out of the market. Even if you got everything right and shorted, the outcome depends not on your chart markup but on the amount behind the position: on a personal deposit of one and a half to two thousand, a night like that closes with a number it's embarrassing to call a result. Prop trading is built precisely for this problem. You pay for the evaluation, while the company provides the trading notional and risk limits. Nights like this repeat - it's worth getting to grips with before the next one.