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K33 Research suggests that the reported liquidation volumes on major cryptocurrency exchanges may be significantly understated. According to Vetle Lunde, a seniorat K33 Research, exchanges like Binance, Bybit, and OKX have altered their reporting methods for liquidation data since 2021, misrepresenting the actual scale of liquidations in the market.
Lunde reported on August 29 that these exchanges have shifted to a system where only a single liquidation per second is recorded, instead of capturing the full volume of liquidations. This change could mean that market participants have been operating with an incomplete understanding of liquidation events, thereby affecting risk assessments and leverage ratios.
Liquidation data is crucial for evaluating market risk and understanding leverage dynamics on trading platforms. It is also used to gauge the impact of volatility and assess whether significant liquidation events, such as those experienced during periods of extreme market stress, have effectively cleared out excessive leverage. For instance, during the {Crypto} Black Monday on August 5, when Bitcoin's price briefly fell below key levels, accurate liquidation data would have been essential for understanding market conditions.
The discrepancies in reported data might be attributed to exchanges managing public relations or maintaining a competitive information advantage. K33 Research's findings suggest that the actual liquidation volumes could be much higher than reported, leading to misinterpretations of market stability and trader risk exposure.
As of the time of this report, Coinglass, a crypto derivatives data platform, indicates that 56,958 traders have been liquidated in the past 24 hours, with total liquidations amounting to $156.7 million, of which 83% were long positions. However, this data also relies on information from the major exchanges, which may not fully reflect the actual market conditions.
The discrepancies in liquidation data underscore the need for transparency and accurate reporting to ensure that market participants have a clear understanding of risk and leverage in the cryptocurrency market.
