Uptick In Crypto Volatility Drives $230M In Liquidations

More than 100,000 traders were liquidated in the past day

By: Samuel Haig Loading...

Uptick In Crypto Volatility Drives $230M In Liquidations

Crypto market volatility is beginning to pick up again after sinking to a multi-year low.

Bitcoin last changed hands for $43,116 after gaining 5% in the last 24 hours, according to CoinGecko. The rally erased BTC’s weekend losses, with the BTC reclaiming its local top from Friday.

BTC/USD. Source: CoinGecko.

The move follows BTC abruptly crashing from $44,000 to $40,750 in 24 hours from Dec. 11, before reclaiming the low $43,000 range last week. BTC volatility has doubled since dropping to its lowest level in four-and-a-half years in late October, according to 30-day and 60-day moving averages provided by 99bitcoins.

BTC Volatility Index according to 30-day (blue) and 60-day (black) moving averages. Source: 99bitcoin.

ETH also tumbled and rebounded within a 5% range over the past day to trade for $2,250. Ether similarly crashed 9% in 24 hours after testing year-to-date highs near $2,375 on Dec. 11, also highlighting a recent uptick volatility.

Data from Coinglass shows more than 100,000 traders getting liquidated out of positions worth more than $230M over the past 24 hours amid the market turmoil. More than 56% of liquidated assets comprised long positions, indicating that a slight majority of traders suffered losses amid the downside downside momentum.

BTC made up $70M worth of liquidated assets, but bucked the broader trend with short positions accounting for nearly two-thirds of the total.

Bitcoin’s dominance over the crypto capitalization is at more than 52%, its highest level since April 2021.

BTC dominance. Source: CoinMarketCap.

Updated spot Bitcoin ETF filings

Bitcoin’s recent outperformance of the broader crypto markets comes as analysts tip that the U.S. Securities and Exchange Commission may soon approve the first spot Bitcoin exchange-traded fund.

Unlike existing futures-based Bitcoin ETFs, a spot ETF would directly invest in and hold BTC rather than derivatives contracts on behalf of investors, exerting bullish pressure on Bitcoin’s supply.

On Dec. 18, the SEC received a flurry of updated spot Bitcoin ETF applications from prospective issuers, including Ark Invest and 21Shares, Wisdomtree, and BlackRock — the world’s largest asset issuer.

James Seyffart, an analyst at Bloomberg, tweeted that the BlackRock and Ark 21Shares applications propose initially supporting in-cash redemptions, noting that in-kind delivery may supported at a later date “subject to receiving regulatory approval.”

In-cash delivery would only allow investors to offload shares for fiat currency, whereas in-kind redemptions would allow investors to receive BTC — offering significant efficiency benefits compared to in-cash. The updated filings follow several meetings between the SEC and spot Bitcoin ETF applicants, with discussions reportedly focused on in-cash versus in-kind delivery.

Valkyrie and Invesco updated their spot Bitcoin ETF applications last week to state they will initially process redemptions in-cash after meeting with the SEC, reflecting the SEC’s preference for in-cash redemptions.

The SEC also delayed deadlines for its verdicts on proposed spot Ether ETF applications from Grayscale, Hashdex, Ark Invest and 21Shares, and VanEck in recent days.