Crypto market liquidation tops $5 billion over past four days…biggest deleveraging since October

Suehyeon Lee

Summary

Over the past four days, forced liquidations in the global crypto market have topped $5 billion, the largest since October last year.
Analysts said a deleveraging phase formed as rising price volatility in thin-liquidity conditions—where leverage had accumulated—set off cascading liquidations.
The market assessed that while the large-scale liquidation has cleared a substantial portion of excessive leverage, volatility is likely to persist for the time being.

Large-scale leverage unwinds are continuing in the crypto (digital asset) market.

According to The Kobeissi Letter on the 1st (local time), the volume of forced liquidations across the global crypto market over the past four days has exceeded $5 billion. This marks the largest liquidation wave since the sharp selloff on Oct. 10 last year.

The liquidation surge is seen as having been triggered by rising price volatility with leverage heavily built up in thin-liquidity conditions. As cascading liquidations unfolded in a short period, a classic deleveraging phase took shape in which price declines in turn triggered further liquidations.

Market participants say the broad liquidation has cleared out a significant portion of excessive leverage, but volatility itself is likely to persist for some time. In particular, until spot demand shows a clear recovery, the risk of another bout of heightened volatility cannot be ruled out.