Data show that the cryptocurrency futures market suffered $ 380 million in the past day, as Bitcoin returned above $ 30,000. Of this amount, $ 240 million in liquidations belonged to traders for a short time.
Crypto Shorts recorded $ 240 million in liquidations in the last 24 hours
In case someone doesn’t know what “liquidation”Are, it is best to first take a brief look at how margin trading works in the crypto futures market.
When an investor opens, say, a Bitcoin debt or short contract on a stock exchange, he must first place some collateral called a “margin.” This margin can be in BTC, any other coin or even a fiat.
With this margin, the investor can choose to take over. “lever”The borrowed amount is often many times higher than the starting position.
The advantage of leverage is that if the price moves in the direction the contract was betting on, the profit earned is then many times higher.
Related Reading | Bitcoin Bloodbath awakens the sleepy giant as a spot of volume
However, it is also true that there will be many more losses. When such losses eat up a certain portion of the margin, the exchange forcibly closes the Bitcoin position.
That is what liquidation is. The table below shows the data for liquidations in the crypto market in the past day.
Looks like liquidations in the futures market have amounted to about $380M In Last 24 Hours | Source: CoinGlass
As you can see above, the crypto market has suffered severe liquidations over the past day, with $ 184 million in the last 12 hours alone.
Most of the liquidations were from traders for a short time, which makes sense because coins like Bitcoin recorded a big jump in price today.
Around 63% of the liquidations have involved shorts | Source: CoinGlass
Looking at the above data, it seems that more than 240 million dollars of liquidations were short-term traders who were laundered.
Large liquidations like today’s are not uncommon in the crypto market. There are several reasons behind this.
The first is the high volatility of coins. Even the largest coins such as Bitcoin and Ethereum can notice quite large oscillations in a short period of time.
Another factor that contributes to this is the fact that many derivatives exchanges even offer 100x leverage.
Uninformed traders who opt for such large positions in an unstable market such as cryptocurrencies greatly increase the risk of liquidation.
The price of Bitcoin
At the time of writing, The price of Bitcoin it is around 30.5 thousand dollars, which is a drop of 15% in the past week.
The price of the coin seems to have already observed a rebound from the crash | Source: BTCUSD on TradingView
Featured image from Unsplash.com, chart from TradingView.com