Crypto Crash: Liquidations May Actually Be $10bn, Says Bybit CEO

According to Bybit CEO Ben Zhou, the recent crypto market liquidation event may have been far larger than current reports suggest.

Data from CoinGlass showed over $2billion in digital asset liquidations within 24 hours on 3 February, marking the largest recorded liquidation event in crypto history. This figure surpassed previous records set during the COVID-19 market crash and the collapse of FTX.

However, Zhou believes these numbers are misunderstood.

Crypto market liquidations are likely misrepresented

Zhou explained that API limitations on exchanges, including Bybit, restrict the amount of data sent to aggregation platforms like CoinGlass. Other crypto exchanges likely impose similar data caps. Zhou estimated Bybit’s liquidations alone totalled $2.1bn, making up more than 85% of the reported figures. CoinGlass had listed Bybit’s liquidations at $333m, significantly lower than Zhou’s estimate.

The discrepancies arise because platforms like CoinGlass rely on data provided through APIs from exchanges, which may have restrictions in place to manage data flow. These limits can result in incomplete data aggregation, painting an inaccurate picture of the total liquidations during significant market events.

In total, over 730,000 traders were affected by the liquidation event. Many faced substantial losses as leveraged positions were wiped out across multiple exchanges. The largest single liquidation occurred on Binance, involving an ETH/BTC trading pair worth $25.6m, based on CoinGlass data.

While many traders faced heavy losses, some profited from the market downturn. On 2 February, one trader earned nearly $16 million from a 50x leveraged short position, betting on Ethereum’s price decline. This significant gain highlights the high-risk, high-reward nature of leveraged trading in volatile markets.

The event reflects the extreme volatility of the crypto market and the potential gaps in reported data due to API constraints. As exchanges handle vast amounts of transaction data, these limits can create discrepancies between actual figures and those reported by third-party platforms.

Traders and analysts must consider these limitations when evaluating market conditions, as they can significantly affect the perception of market stability and risk.

This situation raises questions about the transparency of data reporting in the crypto industry. It emphasizes the need for more comprehensive data-sharing practices to provide accurate insights into market movements, especially during critical events like large-scale liquidations.

1. 01.

   What is crypto liquidation?

   

   Crypto liquidation occurs when a trader’s position is automatically closed by an exchange due to insufficient funds to cover losses. This typically happens in leveraged trading when the market moves against the trader, causing their margin balance to fall below the required level.