Dive into the captivating dynamics of cryptocurrency liquidations in this Alpha exclusive. We examine the factors that fueled liquidations throughout the 2021 and 2022 cycles, such as leverage, whale activity, and shifting market sentiment. With liquidations in 2023 becoming a mi...
Quick Take
- Liquidations were one of the main talking points during the 2021 and 2022 cycles — long being liquidated for the better two years.
- Many reasons liquidations were plenty in 2021 compared to 2022 were due to leverage, whale activity, and market sentiment.
- As 2021 was a bull market, market sentiment was strong to the upside, and prices continued to increase. Hence, long liquidations on small pullbacks were obliterated.
- Into 2022, a bear market, and prices continued to go down 75% from their all-time high, investors wanted to go long at any moment; however, they continued to get burnt.
- Into 2023, it has been a mix of short and long liquidations; shorts did take pole position in 2023 and were on the wrong side. But now you can see liquidations are very similar in size, suggesting a neutral market.
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