The crypto futures market just had its most brutal week in years. Over $5.7 billion in long positions were liquidated across a seven-day stretch, as traders who bet on rising prices found themselves on the wrong side of a vicious selloff.
Total leveraged liquidations, including shorts, reached nearly $7 billion. The crash coincided with roughly $390 billion evaporating from the total crypto market cap, a figure that puts this week in rare and uncomfortable company.
Long positions accounted for over 80% of total liquidations, meaning the overwhelming majority of pain was felt by traders who were positioned for continued gains. Bitcoin and Ether both posted their worst weekly performance since the FTX collapse in November 2022.
A record 13-day streak of Bitcoin ETF outflows had been draining capital from the market in the lead-up. Those outflows totaled approximately $4.4 billion before the streak finally ended around June 5.
Crypto futures markets have a recurring problem. During extended rallies, traders pile into leveraged long positions with increasing conviction. When prices begin to drop, those leveraged positions start hitting liquidation thresholds, which forces automatic selling, pushing prices lower and triggering more liquidations.