According to the CEO of Bybit, the real liquidations in the crypto market in the last 24 hours would have reached a value between $8 and $10 billion, a figure much higher than the data reported by platforms like Coinglass. This gap highlights significant discrepancies in the calculations and raises questions about the reliability of the metrics commonly used to monitor the crypto markets.
An analysis of liquidations in the crypto market: what they are and why they are important
Liquidations in the cryptocurrency market occur when traders, often positioned on leveraged trading platforms, fail to meet margin requirements. In other words, their positions are automatically closed to prevent further losses. This phenomenon is particularly common in a volatile market like the crypto one, where prices can experience sudden and significant swings.
According to Coinglass data, liquidations in the last cycle amounted to approximately $1 billion. However, Ben Zhou, CEO of Bybit, stated that this figure drastically underestimates the real scope of the phenomenon. Zhou estimated that the total liquidations could be between $8 and $10 billion, a significantly wider margin.
Coinglass vs Bybit: why do the estimates differ?
The comparison between the estimates of Coinglass and those of Bybit raises doubts about how liquidations are calculated. Coinglass is a widely used platform for monitoring liquidations and market data, but, according to Zhou, the calculation methodology might not capture the entire spectrum of actual liquidations.
One of the possible explanations is that Coinglass focuses on a limited data sample, analyzing only some trading platforms or overlooking liquidations carried out on less known exchanges. Bybit, on the other hand, might use a broader approach and include liquidations resulting from complex financial instruments, such as crypto derivatives or perpetual contracts, which do not always fall within traditional metrics.
Forced liquidations and implications for the crypto market
Liquidations of this magnitude are not just numbers: they have a tangible impact on the market. When large volumes of positions are liquidated, the domino effect can amplify volatility, causing a drop in prices and further selling pressure. This phenomenon is particularly evident in markets with low liquidity, where even a small imbalance between supply and demand can generate significant movements.
Furthermore, the gap between the estimates of Bybit and Coinglass highlights the need for greater transparency and standardization in the crypto sector data. For investors, these differences can represent an additional risk, making it more difficult to correctly evaluate the market and make informed decisions.
A constantly evolving market
The cryptocurrency market is inherently volatile and often unpredictable. However, episodes like this highlight how the lack of centralized and accurate data can accentuate uncertainty. The statements from the CEO of Bybit suggest that the current tools to monitor the market may not be sufficiently robust to capture the complexity of the crypto landscape.
In the context of a sector that continues to attract institutional and retail investors, the accuracy of data becomes crucial. Analysis platforms will need to evolve to better reflect market reality, including more sophisticated metrics and more inclusive approaches.
Conclusions
The estimates of the CEO of Bybit, which indicate liquidations in the order of $10 billion, highlight the complexity and volatility of the cryptocurrency market. This episode not only underscores the importance of closely monitoring liquidations, but also highlights the gaps in current methods of data collection and analysis.
For investors, it is essential to understand that analysis platforms, while being useful tools, can have limitations. Relying on multiple sources and maintaining a critical view of the available data can make the difference in a market where every decision counts.
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