Crypto Liquidations Explained: Why Ethereum Was Hit Harder Than Bitcoin in the $1.19B Flush

On October 8 and 9, a $1.19 billion selloff in crypto wiped out leveraged positions in a single day. Ethereum suffered disproportionately, with $356 million in liquidations versus $298 million in Bitcoin, despite Ether's market value being less than a fifth of Bitcoin's. Adjusted for market capitalization, the liquidation cost was six times higher for Ethereum.

This gap was largely due to the elevated leverage density in Ether's derivatives market. Long positions absorbed almost all of the damage, with shorts accounting for only $135 million. The largest liquidation occurred on Hyperliquid, totaling $19.98 million in ETH-USD. The trigger for this liquidation was external market events, such as Fed minutes and White House reports.

Understanding liquidations requires knowledge of maintenance margins and liquidation prices, which are triggered when equity falls below the required threshold. The disproportionate impact on Ethereum highlights the high leverage density in its derivatives market.