The series of liquidations on the cryptocurrency market caused by the sell-off tied to the situation around the FTX exchange reflected in a surge of liquidation volume to $300 million. The most interesting part is the source of most liquidations.
Traditionally, every plunge in the market and surge in liquidations is caused by the price performance of the biggest asset on the market, Bitcoin. However, today, this is not the case. According to Liquidation Data, the biggest providers of pain on the market today are FTT and ETH.
Why Ethereum and FTT are causing crash
Following potential insolvency issues on FTX, they had no choice but to deploy as much capital as possible, which involves selling off their Ethereum holdings. The surge in selling pressure has been confirmed by Santiment's data, which confirmed the drainage of ETH wallets owned by FTX.
In just a few days, FTX removed almost 300,000 ETH from its wallets, causing such a massive increase in selling pressure on Ethereum markets that investors had no chance to absorb the aforementioned amount with no harm to the market price of ETH.
Considering the previous price performance of Ethereum, the most likely reason behind such an unexpected spike in liquidations is tied to the increased number of longs on the market. Previously, U.Today reported how traders are actively opening longs despite the open interest tilting toward bears.
In contrast, liquidations on FTT have not happened because of FTX's actions on the market. The most likely reason behind them is the large retail selling pressure caused by a panic around the exchange that uses the asset as a utility token.