LSK price spike pushed Lisk above $2 on Sunday. Specifically, the token gained more than 900% from its August floor. However, it surrendered most of that move within hours. Now it trades near $0.88.
Consequently, that round trip made LSK the largest liquidation event in crypto in a long time. Meanwhile, the event occurred over 24 hours. As a result, forced liquidations removed traders on both sides.
Why the LSK price spike liquidated both sides
Coinglass recorded $41.13 million in LSK liquidations. Specifically, shorts accounted for $32.6 million. In contrast, longs accounted for $9.11 million.
That four-to-one split points to forced buying. Instead, it points away from fresh demand. Short sellers betting on a decline had to repurchase. As a result, each repurchase lifted the price further. Therefore, the rally fed on itself.
Meanwhile, open interest reached $78 million. Meanwhile, daily futures turnover reached $501 million. However, spot order books were far thinner. LSK now holds near $0.81. Nevertheless, it is still up more than 300% on the day.
The burn traders bought awaits holder vote
Most positioning traces back to August 25. Lisk said it would shut down its blockchain on October 31. It plans to rebuild as a stablecoin payments service. Specifically, the service targets company finance teams.
That plan includes a proposal to destroy 100 million LSK. Notably, the treasury holds those tokens. Consequently, the burn would cut maximum supply by a quarter. However, token holders have not yet voted on it.
Additionally, LSK continues as a loyalty token on Ethereum and Base. Meanwhile, anyone still holding on the old chain must bridge out. Therefore, they must do so before the deadline.
Risks and warning signs
Many signs have been flagged before by many analysts. For example, Binance added LSK to its Monitoring Tag. Specifically, that is a delisting risk warning label. Generally, it applies to unusually volatile listings.
Furthermore, the token remains more than 97% below its 2018 peak. However, whether Sunday’s bid survives the vote is unclear. Ultimately, the next three weeks will answer that question.
What to watch next
First, traders should watch the burn vote. Second, they should watch LSK’s bridge deadline. Meanwhile, volatility may continue while both remain unresolved. Still, the market will decide whether this spike was a squeeze or a real shift.