Crypto Liquidations Spike to $480M in Last 24 Hours

LiquidationsJune2020


In a sign of the magnitude of the crypto crash, more than $1B worth of digital assets were liquidated on June 14, according to data from Coin Glass.

Around $480M was wiped out on centralized exchanges over the past 24 hours. Ether represents 42% or $202M of margin calls, while $154.4 worth of BTC positions have been taken out. 

Margin Calls

On-chain liquidations have also surged, with 370 margin calls driving more than 53M DAI on MakerDAO alone. 

By contrast, 401 liquidations worth $55.8M have taken place over the past 30 days. There are also an estimated $202M worth of positions at risk on top lending protocol Aave should the price of Ether slump below $1,009.

Liquidation describes when a leveraged position is forcefully closed due to the value of the collateral assets backing it falling below the required margin threshold to keep it open. 

The liquidations have been suffered by institutional and retail investors alike. 

On Wednesday, The Defiant reported that  the major VC firm, Three Arrows Capital , closed $400M worth of positions and that hundreds of millions in additional loans remain at risk. 

Danny Yuan, the head of trading at 8 Blocks Capital, a Three Arrows partner, says he’s hearing that the hedge fund has suffered significant liquidations. Yuan adds that the firm continues to hold many assets on other platforms, calling for the assets to be frozen to repay creditors.

Continued Deleveraging

Twitter analyst, degentrading, speculated that a Three Arrows failure may post systemic risk for the crypto market because  it borrowed funds from many of the sector’s top lenders. “The collapse of a major fund and a major lender will shrink overall credit in the system and lead to continued deleveraging,” the analyst said. 

Embattled centralized lender Celsius has been desperately fighting to avoid its own nine-figure liquidation event. 

Liquidation Prices

Celsius has added significant sums of WBTC over recent days to protect a $231.4M DAI loan it previously took out using the MakerDAO protocol. According to Etherscan, hundreds of millions worth of assets appear to have been transferred from Celsius-controlled wallets to FTX, a centralized exchange, on the same day the company halted customer withdrawals. Celsius has since added roughly 8,200 BTC as collateral and repaid $47.1M DAI of its MakerDAO position.

Bobby Ong, the co-founder of CoinGecko, told The Defiant that it appears as though opportunistic traders have been hunting the liquidation prices for both Three Arrows Capital and Celsius amid the downturn.

“I find it rather surprising that several of these large crypto companies have completely mismanaged their finances… and did not anticipate the eventual bear market that will come,” Ong added.

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