- Hyperliquid’s Jeff Yan warns of underreported crypto liquidation data.
- Binance’s liquidation data may miss thousands of trades, says Yan.
- Crypto market volatility highlights concerns over liquidation reporting accuracy.
Jeff Yan, co-founder of Hyperliquid, recently highlighted a significant concern over the transparency of liquidation data provided by centralized exchanges (CEXs). According to Yan, some exchanges, including Binance, could be underreporting liquidation events during periods of heightened market volatility.
In a post shared on X, Yan pointed out that Binance’s liquidation data might only report a single liquidation order per second, despite thousands of liquidations potentially occurring in the same timeframe. This, he suggests, could lead to a significant undercount of liquidation events—possibly by a factor of 100.
This comment follows a dramatic surge in liquidations, with over 1.6 million crypto traders affected by a massive wave of liquidations. On Friday, Bitcoin’s price swung dramatically, dipping below $105,000 before bouncing back to $115,353 in just 24 hours. Coinglass, a crypto derivatives data aggregator, reported that the total liquidations for that day amounted to a staggering $19.1 billion.
However, the figures provided may not fully reflect the reality of the market’s volatility. Binance’s practice of reporting only one liquidation order per second may fail to capture the true scope of the liquidations, leaving out much of the data.
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The Risk of Inaccurate Data Representation in Crypto Markets
The potential for underreporting liquidation data raises questions about the accuracy of market data and the transparency of exchanges. Liquidations, particularly in the volatile crypto market, can significantly impact traders’ portfolios and market sentiment. Accurate and timely data on liquidations is crucial for investors, analysts, and market participants who rely on these figures to understand the broader market trends.
Moreover, these discrepancies in reporting could potentially mislead traders into underestimating market risks during volatile periods. If exchanges report only a fraction of the actual liquidations, this could result in skewed perspectives on market health. Therefore, the crypto community may need to push for more consistent and comprehensive reporting practices, ensuring that all liquidation events are captured and communicated accurately.
The issue of underreporting is not new to the crypto industry. However, it is especially pertinent in the context of high-volatility events, when the frequency and impact of liquidations are at their peak. Yan’s comments underscore the need for more transparency in the industry, ensuring that market participants have access to the full scope of data necessary for informed decision-making.
By improving the accuracy of liquidation reporting, exchanges could foster greater trust among traders and contribute to a more reliable market environment.
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