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To the surprise of crypto traders, the past 24 hours turned out to be not exactly what one would have in mind. As the market reacted to the Binance-related news, it also potentially led to an unexpected change in certain cryptocurrencies price action resulting in millions of dollars in liquidations.

Apart from Bitcoin, it was Ethereum that stood out as the altcoin with the most liquidation. Being the second biggest cryptocurrency in the world, it is not a surprise, but the volume of long liquidations stood out from normal. Within the past day, over $15 million worth of long liquidations were observed in the case of ETH.

The other major cryptocurrencies that stood out in this regard were Dogecoin, Pepe coin, ApeCoin and Compound. DOGE noted over $6.13 million worth of long liquidations, marking a two-month high, while the volume of PEPE nearly hit $1 million against merely $80,000 worth of short liquidations.

Dogecoin long liquidation

Similarly, APE recorded about $1.44 million worth of long contracts being liquidated, hitting a monthly high, and COMP followed in suit, observing $809,000 in long liquidations. Collectively, the crypto marketnoted over $121 million worth of long liquidations against $10 million in short liquidations within a day.

ApeCoin long liquidations

While the exact reason behind this is unknown, the sudden shift in tone and liquidations is most likely a reaction to FUD. Earlier in the day, Binances regulated buy and sell arm, Binance Connect, was announced to face closure. This was confirmed by Binance Smart Chain-based decentralized exchange Biswap that tweeted,

After a thorough consideration, Binance has made a difficult decision to disable Binance Connect on 15 August due to its provider closing the supporting card payments service. This change aligns with the strategic efforts of Binance to focus on its core businesses.

Considering the price action reaction to the FUD, the crypto market lost about $14 billion in a day, dropping by 1.2% to hit a total market capitalization of $1.12 trillion.

Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.

Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrencys price to fall and a bearish trend reversal is likely to occur.

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Ethereum, Dogecoin, PEPE note millions in sudden liquidation owing to potential Binance FUD - FXStreet