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In the last 24 hours, on-chain liquidations in decentralized finance (DeFi) protocols have exceeded $350 million, according to Parsec Finance data. The increase in liquidations is linked to market volatility and the overall sell-off in the cryptocurrency market. Bitcoin (BTC) falling below $50,000 and Ethereum (ETH) dropping to $2,200 triggered this wave of liquidations.
Liquidations in DeFi Protocols Reach Annual Peak
Liquidations in DeFi protocols on Ethereum have reached a new annual peak. According to Parsec Finance data, over $350 million in positions were liquidated in the last 24 hours alone. This is seen as a result of sudden market downturns.
The majority of the liquidations were concentrated on three main assets. ETH collateral took the biggest hit with $216 million in liquidations. This was followed by $97 million in wrapped staked ETH (wstETH) and $35 million in wrapped Bitcoin (wBTC). The liquidation of these assets had a significant impact, especially on lending protocols.
This wave of liquidations is attributed to sudden price movements in the cryptocurrency market and the general sell-off. Bitcoin falling to its lowest level since February and Ethereum hitting a six-month low accelerated liquidations in DeFi protocols.
Situation in Centralized Exchanges
Centralized exchanges also experienced significant liquidations in the last 24 hours. According to CoinGlass data, over $1 billion in positions were liquidated in futures trading. About $760 million of these liquidations were from long leveraged positions. Ethereum and Bitcoin investors suffered significant losses with over half a billion dollars in liquidations.
The reasons behind this wave of liquidations include sudden price drops in the market, investors’ leveraged positions, and overall market conditions. Sudden drops lead to forced liquidations of leveraged positions, creating more selling pressure.
The impact of the liquidation wave on the markets may vary depending on future investor actions. If market volatility continues, more liquidations and price fluctuations can be expected. This situation highlights the importance of risk management in DeFi protocols once again.
Liquidations in DeFi protocols emphasize how quickly market conditions can change and the importance of investors’ risk management strategies. The current volatility in the cryptocurrency market forces investors to act cautiously and prudently.
