The crypto futures market saw the highest nymber of liquidations in history on Sunday as the sudden bitcoin price pullback caught overleveraged traders off guard. 

Exchanges offering crypto futures liquidated $10 billion worth of positions on Sunday, toppling the previous market-wide record of $5.77 billion registered on Feb. 23, according to data provider Bybt.

Forced closure of long positions or bullish trades accounted for $9.26 billion, or over 90% of total liquidations, which shows the leverage was excessively skewed bullish across the board. 

Bitcoin futures accounted for more than 50% of total market-wide liquidations on Sunday. Liquidations happen when trades cannot fulfill margin requirements for holding long/short positions and often exacerbate bullish/bearish moves. 

Bitcoin dropped sharply, from $60,000 to $52,148 early Sunday, dragging alternative cryptocurrencies lower. As prices started falling, margin requirements increased and exchanges liquidated longs (squared off with offsetting shorts), adding to downward pressure in the market. 

"This [downward] move was definitely driven by the vast amount of futures being liquidated," Viktor Franken, options trader at Orca Traders, told CoinDesk in a Telegram chat. "Additionally, it was a weekend, and liquidity was thin during the early Asian hours."

The massive forced closure of longs pushed bitcoin futures into backwardation – a market condition where futures trade at a discount to the spot price. 

As seen above, bitcoin futures listed on Binance and Kraken traded at a bigger discount than the ones listed on other exchanges, showing the dump mainly happened on Binance and Kraken. 

"On Binance, the drop was so bad that you were able to pick up long-term futures at prices well below the spot market," Adam Cochran, a partner with Cinneamhain Venture, wrote in a tweet. "While spot [markets] dipped to $51,000, futures were trading in the low $40,000." 

The situation has normalized, with futures drawing higher prices than the spot price. Bitcoin is currently trading near $56,700 – up 8% from Sunday's low, according to CoinDesk 20 data. 

"The fact that we've seen strong buying interest near the psychological $50,000 mark should be a relief for bitcoin bulls following the weekend plunge," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told CoinDesk.

The cryptocurrency may have received a boost from signs of China is softening its stance on cryptocurrencies. On Sunday, Li Bo, deputy governor of the People's Bank of China, called bitcoin and stablecoins "investment alternatives." 

"Lingering regulatory risks could end up clearing the way for further upside in bitcoin if lawmakers sound favorable for the cryptocurrencies' inclusion in the traditional financial system," Ozkardeskaya said. 

Also read: If Bitcoin Starts Closing Below the 50-Day SMA It May Mean Deeper Pullback Ahead