Crypto Market Sees Liquidations Spike Post-Biden Withdrawal: Ethereum Heads Long Liquidations Ratio, Solana Leads Shorts
Analyzing Crypto Market Liquidations After Biden Announcement | Credit: Hameem Sarwar
Key Takeaways
- Liquidations in the crypto market spiked on July 21, reaching $177 million in the past 24 hours.
- U.S. President Joe Biden’s withdrawal announcement was a likely catalyst for these liquidations.
- While the majority of liquidations were longs, Solana had a higher ratio of short liquidations.
President Joe Biden’s exit from the 2024 U.S. Presidential elections has stirred quite a storm in the crypto market, triggering volatility and causing a massive drop across the board.
Following the announcement, the market experienced a surge in liquidations. However, it has since regained its footing and is now approaching new highs.
Crypto Market Volatility After Biden Announcement
On July 22, President Biden announced he would not run for reelection. Before the announcement, the total crypto market (TOTALCAP) had already been trending downward in the short term. The announcement exacerbated the decline further.
However, a sharp reversal started almost immediately afterward, and the TOTALCAP reached a high of $2.44 trillion on July 22, the highest price since June 12. As a result, while the initial reaction to the news was negative, the market has bounced since, even creating a higher low the next day.
It is also worth mentioning that liquidations were not higher than average. Data from Coinglass shows that the liquidations on July 21 were right in line with the weekly average. While the timing of the announcement near the end of the day contributed to the liquidations, the overall figures remain average, even when including those from July 22.
The total liquidations of $160 million on July 21 were modest compared to the monthly high of $463 million on July 4. Of the $160 million, $99 million were long, while $61 million were short positions. This trend was consistent across all exchanges, with Huobi showing the closest to an even liquidation ratio between longs and shorts at 51-49%.
Ethereum Leads Long Liquidations
Over the past day, Ethereum had $27 million long liquidations and only $9 million shorts, for a ratio of roughly 3 to 1. Ethereum’s decline was not unusual, totaling 3% from its local high.
However, a possible reason for the domination of long liquidations is the failed breakdown from a nearly 14-day ascending support trend line. Shortly after the announcement, the ETH price briefly fell below this trend line before regaining its footing.
Since traders often place stop losses or adjust their margin so that their liquidation level is below critical support, it is possible that the decline below this trend line triggered a cascade of liquidations.
It is worth mentioning that while ETH has increased, it has yet to reclaim the trend line yet.
Solana Leads Short Liquidations
Unlike Ethereum, Solana saw $4.2 million long liquidations and $6.7 million short. It was one of the few cryptocurrencies with a ratio favoring short liquidations. The main reason for this is likely the impressive recovery after the initial decline.
Solana created a bullish 30-minute candlestick after the announcement. The candlestick’s high broke out above the previous local high (red trend line). So, the Solana liquidations favored shorts, likely because traders piled on after the initial decline, expecting a continued downtrend, which did not come.
On the contrary, the SOL price bounced and broke out above the local high, a likely level for stopping losses or liquidation triggers.
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