AI Chip Bets Face $33M Liquidation Wipeout As Bitcoin, Ethereum Approach Danger Zones Ahead Of Black Monday Fears

Precedent & Market Context

Despite investors pulling $1 billion from Ethereum and Solana ETFs in two weeks, Solana has shown resilience and outperformed Ethereum in various metrics, including 1-month and 90-day windows, as well as its key support level. Ethereum's larger fund size and faster outflow rate may indicate a more significant decline in the longer run.

Main Event

Crypto venues recorded over $33 million in liquidations tied to AI chip stocks, with leveraged long positions accounting for most losses. The wipeout hit contracts tied to Micron (MU), SanDisk (SNDK) and SK Hynix (SKHY) one day before the 39th anniversary of the Black Monday crash. The losses were seen in perpetual futures, contracts that have no expiration date and follow the price of a stock.

Analysis & Market Impact

Most liquidations on Saturday were long positions, or bets on prices rising. Contracts tied to the Direxion Daily Semiconductor Bull 3X Shares (SOXL) took the biggest hit, with $13.05 million worth of liquidations over a period of 24 hours. The largest single position liquidated was worth roughly $3.17 million. SOXL's contract was up more than 8.5% on the day, according to CoinGlass data, while Micron and SK Hynix contracts each rose more than 7%. However, all three later rebounded from those lows.

Implications & Outlook

The chip losses were included in a broader wave of forced selling. Crypto markets have seen about $352.1 million in liquidations during the past 24 hours, a rise of 67% over the past day. Bitcoin is now trading near its next risk zone. According to CoinGlass, it was around $80,996. CoinGlass has $80,862 as Bitcoin's long 'max pain' level in the past 24 hours. That's just $134 more. The gauge shows where the biggest pile of leveraged bets on one side would be forced to close.