Amid the ongoing market downturn, CoinGlass data confirm why the crypto market is known for its extremely high volatility. In the last 24 hours, data from sources shows that crypto traders suffered a massive $300 Million in Liquidation Losses.
This came after Silvergate Capital Corp, the leading bank for innovative businesses in fintech and cryptocurrency, announced plans to wind down its operations. The announcement not just triggered the liquidation crises but also prompted leading cryptocurrencies to fall significantly.
So, before diving deep into which exchange traders' suffered the most liquidation losses, let’s first look at what prompted Silvergate Capital to fall.
Fallout of Silvergate Capital & $300 Million in Liquidation Losses
Silvergate Capital, a central lender to the cryptocurrency industry, announced on Wednesday that it is winding down its operations and liquidating its bank. Following the announcement, the stock price of Silvergate Capital fell by more than 36%.
Silvergate, along with New York-based Signature Bank, has been one of the two primary banks for crypto businesses. However, after the FTX meltdown, Silvergate Capital started facing the heat of the market because FTX was a major Silvergate customer. To that end, the company wrote;
“In light of recent industry and regulatory developments, Silvergate considers that an orderly wind-down of Bank activities and voluntary liquidation of the Bank is the best way ahead.”
Actually, at the time of the FTX collapse, a number of crypto firms rush to Silvergate Capital to withdraw their funds. This leads the bank to face a liquidity crisis which prompted the bank to sell its bond.
As a result, Silvergate Capital announced last week that because of the ongoing liquidity crisis and investigation by the US Department of Justice and other agencies, it would delay filing its annual report. All these created a buzz in the crypto community that the Silveragte crisis is the next major one after the FTX meltdown.
Silvergate Crisis Triggered Liquidation Losses
Sources data reveal that crypto traders had suffered $300 million of liquidation losses in the last 24 hours. Among the total liquation loss, Binance traders suffered the most, with losses of $105 million. Followed by Binance, the crypto exchange OKX and Huboi suffered losses of $74 million & $42 million, respectively.
Furthermore, in terms of assets, Bitcoin (BTC) traders lost the most, totaling $112 million, while Ethereum (ETH) liquidations totaled more than $73 million. In addition, among all liquidated trading positions, $276 million were longs & $30 million in shorts.
These soaring long liquidations indicate that the unexpected drop in cryptocurrency prices took investors off guard. As a result, the leading cryptocurrencies' prices continue to plummet.
Crypto Market Plummets Following Silvergate Crises
In the last 24 hours, the world’s leading cryptocurrency, Bitcoin, drops by more than 8.5%. Not just BTC, but other cryptocurrencies like Ethereum, Solana, Dogecoin, Shiba Inu, Litcoin, and Tron also witnessed a price drop of more than 8%.
Apart from cryptocurrencies, the announcement also triggered the US equity market to witness a sharp fall in its yesterday trading session (March 09). This clearly indicates how deeply these assets are correlated with Silvergate Capital Bank.
After the FTX meltdown, the Silvergate crisis is the next major one which is deeply affecting the trading industry. This indicates that in the times to come governments around the world will definitely establish a more stricter crypto regulation.
This, however, serves as a reminder for traders that the cryptocurrency market is a highly volatile asset. So, before investing in any such risky asset, do your own research.
To know more about how $300 Million in Liquidation Losses affected the trading community, go check out SunCrypto Academy.