$290M in Liquidation as Altcoins Rally Crushes Short Positions
[TL; DR]
Over $290 million worth of short trades were liquidated in the second week of July.
The price of Ripple increased by over 70% following the news of Ripple’s partial victory over the US SEC.
Bitcoin, Solana and XRP contributed to the largest crypto liquidations that occurred after Ripple’s win over the SEC.
Introduction
The second week of July 2023 created Optimism in the crypto sector following Ripple’s partial victory over the U.S. Securities and Exchange Commission (SEC). The news that the sale of buy usdp on exchanges does not constitute investment contracts brought relief to various crypto projects and investors. As a result, the prices of major cryptocurrencies rose by large margins. This article covers the effect of several crypto rallies on short trades.
Over 80,000 Traders Liquidated
The unexpected crypto rally that occurred in the second week of July following the news of Ripple’s victory over the SEC resulted in over 80,000 traders liquidated. According to Coinglass data, there were over $290 million crypto liquidations during the period that stretched from 13 to 14 July.
In short, crypto liquidations occur when exchanges forcefully close leveraged market positions as a result of partial or total loss of the traders’ initial margin. Basically, a liquidation shows that a trader has no sufficient funds to keep the trade open.
As expected, most of these liquidations were short positions since several top ranked non-stablecoin cryptocurrencies had double-digit gains during that period. It is also important to note that despite these gains most of the major cryptocurrencies are trading within market channels.
The Coinglass report shows that about three quarters of the liquidations were crypto shorts with a total market value of about $215 million. The most liquidations occurred for traders who had short positions for Bitcoin (BTC), Ripple (XRP) and Solana (SOL). This is because these cryptocurrencies gained much within the short period.
As an example, the value of XRP rose by over 80% following the news of Ripple’s partial victory over the US SEC. Despite that remarkable price rise the Ripple crypto was still 76% lower than its all-time high of $3.40 it attained in 2018.
Read also: Solana or Ethereum：Which is The Better Smart Contract Platform
Price Performance of Other Altcoins
There were several other altcoins that gained by double digits within the period. In addition to Solana and Ripple, the prices of ADA, Ether and MATIC rose by large margins which led to the total crypto market capitalization to rise by over 6.19% and the trading volume to increase by more than 95.72%.
In particular, the price of ETH increased by 8% to trade above $2,000 while Bitcoin traded above $31,000 within the short period.
Bitcoin futures
During that period, Bitcoin futures had the lowest liquidations which shows a falling interest among futures traders. In all, less than $9 million worth of Bitcoin futures were liquidated. On the other hand, Bitcoin made up a large proportion of the $28 million crypto liquidation that recently occurred. Nevertheless, this was probably the lowest level of liquidations experienced this year.
A note about the XRP vs SEC Ruling
The SEC vs Ripple court case has been going on since 2020 when SEC accused Ripple, the San Francisco-based financial technology firm, of selling unregistered securities in the form of XRP crypto.
Read also: SEC Labels 37 Cryptocurrencies as Securities
However, on 13 July Analisa Torres, the New York Southern District Court Judge, ruled that the sale of XRP on crypto exchanges does not constitute securities. The court also ruled that selling Ripple’s XRP to institutional investors violated the securities laws.
Generally, many crypto enthusiasts have viewed Ripple’s partial victory over the SEC as a positive development in the crypto space since it has set a precedent for similar cases. Even Stuart Alderoty, Ripple’s Chief utive Officer, said that the ruling was a big win for the firm.
Alderoty tweeted, “A huge win today – as a matter of law - XRP is not a security.”
A Huge Win for Ripple – Stuart Alderoty
As the picture shows, Ripple as well as crypto traders and investors are celebrating Ripple’s victory over the SEC. And according to the ruling, cryptocurrencies that are only traded on exchanges are non-securities. They become securities if they are sold to institutional investors.
Conclusion
Ripple’s partial victory over SEC triggered a surge in prices of several cryptocurrencies that include Bitcoin, XRP, Solana and BNB. That sudden rally of various cryptocurrencies led to the liquidation of short trades worth over $290 million. However, the value of XRP remains lower than its all time high of $3.40 that occurred in 2018.
FAQs about Crypto Liquidations
What is estimated liquidation price in crypto?
The liquidation price in crypto is the value at which a crypto exchange closes leveraged positions of a specific cryptocurrency like Bitcoin. A liquidation shows that a trader has no sufficient funds to keep the trade open.
What happens if I get liquidated at Gate?
When a position is liquidated at Gate.io crypto exchange you draw more margin from your balance to meet the new requirement. You can also cancel some of the open orders so as to reduce the margin requirement.
Is it safe to leave crypto in Gate?
Gate.io exchange is very secure to the point that you can leave your cryptocurrencies there. According to some recent surveys Gate.io is one of the most secure crypto exchanges you can think of.
