The recent flash crash of Bitcoin has had a significant impact on gaming-related tokens, causing a ripple effect in the cryptocurrency market. On Wednesday, Bitcoin, the largest cryptocurrency in terms of market capitalization, experienced a sudden decline of approximately 7%, leading to a domino effect that resulted in gaming tokens losing anywhere from 5% to 15% of their value.
Impact on Gaming Tokens
According to data from CoinGecko, following the crash, Immutable’s IMX token suffered a decline of around 9%, while The Sandbox’s SAND token dropped by about 12%. Axie’s AXS token experienced a roughly 10% decrease, and the GALA token took a significant plunge of approximately 13%. Other gaming tokens, such as Merit Circle’s BEAM token and ApeCoin, also fell by 9.5% and 13% respectively. Additionally, gaming tokens like GMT from the “move-to-earn” game Stepn, Enjin Coin, Parallel’s PRIME token, and WAX also faced losses within the past day.
It is worth noting that these cryptocurrencies have already experienced overall declines over the past week, with their losses worsening following Bitcoin’s flash crash on Wednesday morning.
Liquidation of Long Positions
The crash led to the liquidation of over $550 million in crypto long positions. CoinGlass data indicates that 172,626 traders were liquidated, with total long liquidations reaching $557 million and short liquidations totaling around $58 million. Among the exchanges, OKX had the highest number of liquidations at over $230 million, followed by Binance at $105 million and Huobi at around $74 million.
Bitcoin-tracked futures experienced $110 million in both short and long liquidations over the past day, while Ethereum-linked futures saw over $82 million in liquidations.
Tokens that withstood the Crash
Despite the overall market downturn, a few tokens managed to make gains amidst the chaos. Axie’s Smooth Love Potion (SLP) and Yield Guild Games’ YGG tokens saw increases of approximately 4% and 11% respectively, seemingly unfazed by Bitcoin’s tumble. Oasys also experienced a rise of about 6.3% within the past day, joining the limited group of tokens that escaped the negative effects of the crash.
While the current situation may appear challenging for lagging gaming tokens, it is important to note that some of them have recently achieved notable milestones. IMX reached a 20-month high of $2.35 last month, reaching prices not seen since the bullish market of April 2022. GALA also witnessed an 18% gain during the same period, although its price has since dropped back to around $0.027, similar to mid-December levels.
The high number of liquidations coincided with Bitcoin’s decline to as low as $40,000, following a report from Matrixport that claimed the SEC is likely to reject spot Bitcoin ETF applications this month. “Matrix on Target projects a January rejection for Bitcoin Spot ETFs by the SEC, cautioning traders to hedge long exposure,” the company wrote in a recent X post (formerly Twitter).
