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Bitcoin Brief Bounce Back Above $67,000: Triggers Nearly $300 Million In Total Liquidations

The crypto market has recently experienced a wave of liquidations, amounting to nearly $300 million, closely following Bitcoin’s sharp reclaim of the $67,000 mark.

This surge in Bitcoin’s value, a stark reversal from its previous downtrend, caught many traders off guard, especially those who had placed bets on the continuation of the market’s decline.

Over 80,000 Traders Faces Liquidation

The data provided by Coinglass sheds light on the magnitude of the liquidations, revealing that approximately 86,047 traders suffered losses exceeding $250 million within a mere 24-hour period.

Major exchanges like Binance, OKX, Bybit, and Huobi were the arenas for these significant financial setbacks, with Binance traders bearing the brunt of the liquidations.

Particularly, Binance recorded $128.7 million in liquidations, while other major platforms such as OKX, Bybit, and Huobi also experienced significant liquidations, amounting to $99.87 million, $33.18 million, and $17.70 million, respectively. Meanwhile, despite also facing liquidations, the smaller exchanges had a comparatively minor impact.

Most affected positions were short trades, reflecting a widespread anticipation of a market downturn that did not materialize as expected. Short positions recorded an estimated 57.55% of the liquidations, equivalent to $164.10 million, from traders betting against the market.

On the flip side, long position holders also faced their share of losses, contributing to nearly 40% of the total liquidations, amounting to $121.07 million. 

Crypto market liquidations heatmap.

Bitcoin Recovery And Future Prospects

The sharp recovery of Bitcoin, momentarily reclaiming highs above $67,000, has reignited interest in its market behavior and future trajectory.

Bitcoin price chart on TradingView

Despite a 6.6% dip in its market capitalization over the past week, Bitcoin’s value saw a notable 6% increase in the last 24 hours, with its market cap presently sitting above $140 billion. This resurgence in trading activity, with daily volumes climbing from below $60 billion to heights above this mark, signifies renewed investor confidence and heightened trading interest.

Adding to the discourse, cryptocurrency analyst Willy Woo presents an optimistic outlook for Bitcoin, suggesting the possibility of a “double pump” cycle reminiscent of the market patterns observed in 2013.

According to Woo, this pattern could herald two significant price surges for Bitcoin in the coming years, with the first peak anticipated by mid-2024 and a subsequent, more substantial rise in 2025.

While such dual surge scenarios are rare, Woo’s analysis, based on current market conditions and Bitcoin’s growth potential, offers a glimpse into the future of the world’s leading cryptocurrency.

Featured image from Unsplash, Chart from TradingView

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Binance Sets New Record: Spot Trading Volume Reaches $427 Billion

According to a recent CoinGecko report, Binance, the world’s largest centralized exchange (CEX) by trading volume, has retained its market leadership position in 2023. 

Despite facing increased regulatory scrutiny and undergoing significant leadership changes, Binance maintained a market share of 43.7% and saw its spot trading volume rise to $427.1 billion in December 2023, representing a 37.5% month-on-month (MoM) increase.

Binance Trading Volume Reached $3.8 Trillion In 2023

According to CoinGecko’s report, Binance started the year with a commanding 63.5% market share but experienced a gradual decline throughout 2023, ending with a 43.7% market share in December. 

While Binance still dominated the market with 52.6% of the total spot trading volume in 2023, the exchange’s relative market share decline was notable. In absolute terms, Binance generated $3.8 trillion in trading volume throughout the year.

Binance

As previously reported, Binance faced significant regulatory pressure throughout 2023, culminating in a settlement agreement in November that required the exchange to pay a $4.3 billion fine to the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CTFC) for alleged financial breaches. 

As part of the settlement, Binance’s CEO, Changpeng Zhao (CZ), also agreed to step down. Richard Teng has assumed the role of the company’s head, while CZ remains restricted from traveling outside the jurisdiction of the United States as the legal battle unfolds. 

Upbit And OKX Follow Closely

Upbit, South Korea’s largest cryptocurrency exchange, managed to maintain its position as the second-largest centralized exchange in 2023, with a 9.5% market share and $687.0 billion in spot trading volume for the year.

According to the report, Upbit benefited from the Kimchi Premium, which resulted in strong local demand and premium prices for crypto assets. 

The exchange’s monthly spot trading volume hit a yearly high of $90.7 billion in December, with a 93.5% quarter-on-quarter (QoQ) increase.

Conversely, OKX secured the third position among centralized exchanges in 2023, with a 6.7% market share and $485.9 billion in trading volume. Throughout the year, OKX experienced a steady increase in market share, starting at 5.1% in January and ending at 8.9% in December. The exchange’s trading volume in Q4 reached $177.9 billion, reflecting a notable 151.6% QoQ gain.

Among the top 10 centralized exchanges, CoinGecko reports that MEXC recorded the highest growth in Q4 2023, with trading volume surging by 203.7% to $90.4 billion. 

Bybit followed closely with a growth rate of 162.1% ($107.5 billion), while KuCoin experienced a growth rate of 161.2% ($49.2 billion). KuCoin regained its spot in the Top 10 in Q4 after briefly losing it in Q3, with a market share of 3.3% at the end of December.

Binance

Binance Coin (BNB) has successfully maintained its position above the $300 threshold, with the current trading price standing at $304. This represents a 1.8% decrease in price over the past 24 hours.

Featured image from Shutterstock, chart from TradingView.com 

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Forget The SEC And Bitcoin ETF Approval Drama, Here’s Why Bitcoin Flash Crashed

The recent flash crash of Bitcoin from over $45,500 to as low as $41,100 has sent shockwaves throughout the crypto community, sparking debate over the underlying causes. While some have attributed the crash to unconfirmed rumors that the US Securities and Exchange Commission (SEC) might, after all, not approve Bitcoin ETFs in January, The Wolf Of All Streets on X suggests a different explanation.

Blame The High Funding Rate For The BTC Crash

The analyst points to the ultra-high positive funding rate on perpetual futures contracts as the primary culprit. In crypto perpetual trading, the funding rate is a mechanism that adjusts the price of futures contracts to reflect the difference in the spot price of the underlying asset, in this case, Bitcoin.

In recent months, the funding rate, according to Coinglass, had surged to multi-month highs, reaching an annualized rate of 66% on January 2, as The Wolf Of All Streets noted, before today’s crash.

Bitcoin funding rate | Source: Coinglass

With Bitcoin trending higher, a large influx of long positions on Bitcoin’s perpetual futures contracts drove the funding rate to monthly highs. Expanding Bitcoin prices created an imbalance in the market, with more people paying to be long than short. As a result, when the price of Bitcoin began to decline rapidly, exchanges had to unwind long positions, triggering a wave of liquidation. 

As of January 3, records from Coinglass show that over $669 million were liquidated. Most of these positions were long, at around $577 million, with only approximately $91 million being shorts. Overall, OKX closed the most positions with $292 million longs closed. Binance, Huobi, and Bybit also closed many long positions.

Bitcoin liquidation | Source: Coinglass

Will Bitcoin Degens Arrest The Sell-Off?

According to The Wolf Of All Streets, the recent flash crash was not a natural market event but an intentional move orchestrated by “degens.” Based on the analyst, the unusually high funding rate as of early January 3 created a situation where long positions, amplified by leverage, had to be liquidated for equilibrium to be reinstated in the Bitcoin market.  

The analyst’s comments echo those of other market observers who have warned of the potential for blow-ups in the perpetual futures market due to the high leverage and funding rates involved. These warnings have become more significant in light of the recent flash crash.

Bitcoin price trending lower on the daily chart | Source: BTCUSDT on Binance, TradingView

How prices will react going forward is unclear. However, what’s clear is that bears appear to be in control in the short term. The recent sell-off is at the back of high trading volume that may see the coin track lower, towards $38,000 or lower, in the coming sessions.

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OKX DEX Loses Over $400,000 To Hackers – What Happens To Customer Funds?

According to blockchain security company SlowMist, OKX DEX, a decentralized exchange aggregator platform, lost cryptocurrency valued at over $400,000.

An attacker was able to transfer tokens that users had not allowed by compromising the management privileges of a market maker contract, according to the explanation for the vulnerability.

On the OKX DEX aggregator platform, a deprecated proxy contract was the subject of a recent vulnerability that allowed a hacker to obtain administration access to the contract without authorization.

OKX DEX: Deprecated Contract Raises Concerns

When a protocol stops actively using a contract to carry out user transactions, it is considered deprecated. It appears that OKX has updated the contract but hasn’t entirely stopped using it.

The claimTokens function of the OKX DEX smart contract experienced a problem, according to blockchain security firm SlowMist. The TokenApprove contract, which required user authorization, invokes the ability to send cash to a trustworthy DEX Proxy.

On December 12, the SlowMist team reported that the OKX DEX Proxy Admin Owner upgraded the DEX Proxy contract with a new implementation. The purpose of this new implementation was to invoke the claimTokens function straight from the DEX contract.

The exchange said that 18 of the approved addresses for the contract had been compromised, and linked the event to the management rights of a cancelled OKX DEX market maker contract being compromised.

Additionally, the exchange pledged to pay back all impacted users. It would also carry out a comprehensive security examination in order to stop something similar from happening again.

OKX Hack: Actual Damages Unknown

According to PeckShield, another researcher specializing in blockchain security, this vulnerability has cost over $2.76 million.

In the last 30 days, OKX DEX is thought to have had over 50,000 active user wallets; however, it is unknown how many users were impacted by the most recent hack.

Users should employ caution while communicating with DeFi protocols, especially those supported by well-known firms in the industry, as highlighted by the OKX DEX breach.

Featured image from Shutterstock