Originally published on: September 02, 2024
Recent research conducted by K33 Research has shed light on a concerning revelation in the world of cryptocurrency market liquidations. Analyst Vetle Lunde uncovered discrepancies in the reporting of liquidation data by major exchanges, such as Binance, Bybit, and OKX, suggesting that the actual magnitude of liquidations could be much worse than what has been disclosed.
According to the findings, exchanges have been adjusting their reporting of liquidation data since 2021, leading to a situation where only a fraction of liquidations are being accurately recorded. This revelation has raised alarms about the reliability of the data being used by crypto traders to assess risk appetite and leverage ratios on exchanges.
Lunde emphasized that the current liquidation data provided by exchanges is misleading and significantly underrepresents the actual volume of liquidations in the market. This discrepancy has created an environment where traders are operating without a complete picture of the market, potentially exposing them to unforeseen risks.
The research also highlighted the disconnect between open interest, a key measure of crypto derivatives value, and the reported liquidation data. This disparity underscores the importance of having accurate and comprehensive data to understand the impact of sudden volatility and large-scale liquidation events, such as the recent Crypto Black Monday incident.
While the reasons behind the altered reporting of liquidation data remain unclear, Lunde speculated that exchanges may have their own motives for limiting information disclosure. This could include PR considerations or a desire to maintain an information advantage in the market.
As the crypto market continues to evolve, the importance of accurate and transparent data cannot be overstated. Traders are advised to exercise caution and consider alternative sources of information to supplement the existing data provided by exchanges.
Stay tuned for updates on this developing story and its implications for the crypto community. Remember, in the world of cryptocurrencies, knowledge is power.
