The amount and scale of crypto market liquidations could be much worse than data from major exchanges suggest, according to a researcher.

On Aug. 29, K33 Research senior analyst Vetle Lunde reported that major cryptocurrency exchanges such as Binance , Bybit, and OKX had significantly altered their reporting of liquidation data since 2021.

These alterations meant that exchanges recorded one liquidation per second instead of reporting all liquidations. 

“Liquidation data from exchanges are bogus and a vast underrepresentation of actual liquidation volumes in the market,” he said, adding: 

“Liquidation data has been wildly underreported in the past 3 years.”

If true, that would mean that crypto traders may have essentially been working off a blurry picture of the market.

Liquidation data is typically used as a “clean way to gauge risk appetite” and better understand leverage ratios on exchanges. 

The research noted that open interest, a measure of the value of crypto derivatives yet to expire, does not always correlate with liquidation data, as evidenced by the chart below. 

Crypto liquidations may be way worse than data has let on, suggest researchers image 0

Changes in OI vs liquidations. Source: K33 Research

Additionally, liquidation data could also be used to better understand the impact of sudden volatility and whether or not leverage has been fully flushed out during large liquidation events such as Crypto Black Monday on Aug. 5, when Bitcoin’s price fell below $50,000 briefly. 

The researcher speculated that exchanges could be limiting data for PR considerations or maintaining an information advantage for their own benefit: 

“Some exchanges even have interests in investment firms that may trade on information that the rest of the market does not have.”

He said that monitoring changes in open interest may help gauge leverage flush outs as it can compare past leverage events to current ones “but fails to account for traders opening new positions amidst the carnage.”

“For now, liquidation data are mostly erroneous entertainment and not actionable.” 

Cointelegraph reached out to the exchanges mentioned in the research but did not receive comment by the time of publication. This article will be updated if they return comment.

Related: Bitcoin traders wait for $62K as 3% BTC price gains eat up liquidity

At the time of writing, crypto derivative data analysis platform Coinglass reports that 56,958 traders have been liquidated over the past 24 hours with total liquidations of $156.7 million, 83% of which were long positions . 

However, that information is also derived from data streams from the major exchanges. 

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