In a recent announcement, Ben Zhou, the CEO of Bybit, has raised eyebrows by contesting the reported figures surrounding crypto market liquidations. While mainstream reports have suggested that liquidations reached a modest $2 billion, Zhou argues that the actual numbers could rest between an alarming $8 billion and $10 billion. As the head of a significant trading platform, Zhou’s skepticism stems from empirical evidence amassed from Bybit’s own internal statistics, which revealed a staggering $2.1 billion worth of liquidations within just 24 hours. This figure starkly contrasts with the $333 million cited by Coinglass, hinting at a systemic underreporting in the industry.
Zhou’s reservations bring to light the critical issue of data transparency in cryptocurrency trading. He pointed out that various exchanges, Bybit included, have imposed restrictions on their Application Programming Interfaces (APIs), inhibiting data refresh rates. Zhou has vowed to increase transparency moving forward, aiming to publish comprehensive liquidation records that truly reflect market activity. This commitment aligns with concerns raised by Vetle Lunde, a leading researcher at K33 Research, who has asserted that the reliability of liquidation data has been in decline since mid-2021.
Lunde emphasizes that major exchanges, including Binance and OKX, have limited their WebSocket APIs, allowing only one liquidation report per second. This restrictive measure severely underrepresents the reality of liquidation events, which have become increasingly frequent and volatile within the crypto ecosystem.
Liquidations occur when traders are unable to maintain leverage in a volatile market, resulting in forced closures of positions. The recent spike in liquidation, as described by Zhou, has invited comparisons to the catastrophic events of the Terra/Luna collapse and the subsequent FTX debacle. The scale of these recent liquidations is perplexing, marking them as some of the most sizable events observed in recent trading history.
As liquidation numbers can significantly impact market sentiment and risk exposure, it raises a crucial question: Are exchanges manipulating the perception of these figures? There exists a theory that some trading platforms might prefer to obscure the true extent of market liquidations to uphold trader confidence. Lunde noted that revealing the full scale of losses could engender apprehensive sentiments among users, thereby adversely affecting trading volumes.
Moreover, the interconnectedness between certain trading platforms and investment firms leads to further intrigue regarding selective data reporting. It is speculated that these affiliations may enhance the competitive edge for firms that have access to more accurate market information, thus creating an uneven playing field in a space already saturated with uncertainty. The implications of this selective representation extend beyond the immediate trading arena into broader market dynamics, suggesting a need for greater regulatory oversight and standardization.
As the crypto market continues to grapple with volatility, the discrepancies in liquidation figures underscore the pressing need for transparency and reform in how data is reported and shared. Zhou’s initiative may pave the way for more trustworthy practices, but it will require collective efforts from all market participants to establish reliable standards in the rapidly evolving landscape of cryptocurrency trading.
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