Crypto liquidations hit $610M as long squeezes cloud ‘Uptober’ outlook
Leveraged bulls under distress as the 'Uptober' rally remains elusive.
Crypto liquidations have hit nearly $610 million in the past 24 hours as of writing, with leveraged bulls suffering the most losses ahead of the FOMC Meeting Minutes scheduled for late Wednesday, the 7th of October.
As of writing, the pace of market wreckage was slightly lower compared to the recent liquidation cascades since late September. But there was one common thing, though: bulls were increasingly facing more losses, raising doubt about the much-expected ‘Uptober’ rally.
Crypto liquidation losses cross $500M for leveraged bulls
In the Wednesday liquidation cascade, longs lost $545 million while shorts bled only $63 million. Another liquidation spike happened last Friday, the 2nd of October, and coincided with a weaker jobs report.
During last Friday’s trading session, the overall market suffered $580 million in losses, but bulls bore the brunt at $330 million. A similar trend was seen on the 28th of September, as leveraged bulls lost over $415 million while short-sellers lost $110 million.
Simply put, long squeezes (targetting leverage bulls) have intensified in October around key major macro events.
After October 8th’s U.S. 30-year bond auction, the next key macro event is the inflation report (CPI) scheduled for the 14th of October. Next week’s inflation report comes before the Fed rate decision set for the 28th of October and will reinforce the easing Fed rate hike fears or escalate them.
The current market consensus leans towards a 78% chance of an interest rate pause. But it’s not clear whether the Fed will have a hawkish or dovish rate pause.
‘Uptober’ in limbo?
That said, the recent liquidations have continued to reset the rising leverage seen during the Q3 broader recovery, especially in the altcoins and tokenized securities sector. So far in early October, most assets have a funding rate below 10% or negative.
In particular, Bitcoin’s [BTC] funding rate has dropped from 7% to below 1%. On the other hand, Ethereum’s [ETH] Funding Rate has dropped to 10%.
Simply put, the Futures market is not frothy, reducing the risk of potential major catastrophic liquidation cascades.
Still, the ongoing trend means any leveraged bulls could still be hunted towards next week’s CPI data report and around the Fed rate decision.
If so, the immediate lower liquidity pools at $83.0K and $83.1K (bright yellow zones) could be tagged. With the ongoing profit-taking from some BTC holders, such a move couldn’t be overruled.
Despite the short-term headwinds, the current BTC price level remained favorable for bulls. Price action was still above the May peak of $82K and the 50-week Moving Average (MA).
Put differently, BTC was still structurally bullish despite an elusive ‘Uptober’ amid the ongoing consolidation below $88K. Only a decisive dip below $82K would reinforce short-sellers’ edge and increase the risk of a further downside scenario.
Final Summary
- Crypto liquidations hit nearly $610 million on Wednesday ahead of the FOMC meeting minutes.
- Leveraged bulls’ losses crossed $500 million, resetting broader market leverage.
