The cryptocurrency market is experiencing a tumultuous period, with decentralized finance (DeFi) protocols bearing the brunt of the volatility. A staggering $350 million in liquidated positions has been recorded on Ethereum-based DeFi platforms in the past 24 hours, marking a new yearly high, according to data from Parsec Finance.
This dramatic surge in liquidations coincides with a broader crypto market downturn. Bitcoin and Ethereum have both plummeted to multi-month lows, triggering a cascade of margin calls and forced sell-offs.
Ethereum (ETH) has been the most affected asset, with over $216 million in liquidated collateral. Wrapped staked ETH (wstETH) and wrapped bitcoin (wBTC) also suffered significant losses, totaling $97 million and $35 million respectively. The rapid decline in asset prices has caught many DeFi users off guard, leading to margin calls and the liquidation of their positions.
The situation is exacerbated by the turmoil in the derivatives market. Centralized exchanges have recorded over $1 billion in futures liquidations in the past 24 hours, with the majority being long positions. This indicates that a large number of traders were betting on continued price increases and were caught off guard by the sudden market downturn.
Also Read: Market Meltdown: $1B+ Erased as Crypto Collapses, Ethereum Down 25%
The DeFi ecosystem is particularly vulnerable to price fluctuations due to the leverage inherent in many protocols. As the market continues to experience volatility, it is likely that we will see further liquidations in the coming days. This could have a ripple effect on the broader crypto market, as DeFi protocols play an increasingly important role in the ecosystem.
Investors and traders are advised to exercise caution and manage their risk carefully during this period of heightened volatility.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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