Data shows that the cryptocurrency futures market received $380 million over the past day as Bitcoin rebounded above $30,000. Of this amount, $240 million was liquidated to short traders.
Crypto shorts are watching $240 million in liquidations over the past 24 hours
In the event that no one knows whatqualifiersIt is best to first take a quick look at how margin trading works in the cryptocurrency futures market.
When an investor opens, for example, a long or short Bitcoin contract on a derivatives exchange, he must first provide some collateral called “margin”. This margin can be in bitcoin or any other currency or even fiat.
Against this margin, the investor may choose to takePositive effectLent amount often many times the initial position.
The advantage of leverage is that if the price moves in the direction in which the contract is betting, the profits made are several times now.
Related reading | Bitcoin Bloodbath Awakens Sleeping Giant As Spot Size Increases
However, it is also true that any losses that will be incurred will also be more abundant. When these losses devour a certain portion of the margin, the exchange forcefully closes the Bitcoin position.
This is what is meant by filtering. The table below shows the liquidation data in the crypto market over 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 cryptocurrency market has experienced some heavy liquidation over the past day, reaching $184 million in the last 12 hours alone.
The majority of the liquidations took place from short traders, which makes sense since coins like bitcoin have noticed a significant recovery in price today.
Around 63% of the liquidations have involved shorts | Source: CoinGlass
Looking at the above data, it appears that more than $240 million of liquidations were liquidations of short traders.
Large liquidations like today are not particularly common in the cryptocurrency market. There are several reasons behind this.
The first is the high rate of currency volatility. Even the largest coins such as Bitcoin and Ethereum can notice fairly large fluctuations in a short period of time.
Another factor that contributes to this is the fact that many derivatives exchanges offer leverage of up to 100 times.
Uninformed traders choosing such large positions in a volatile market like cryptocurrencies significantly increase the risk of liquidation.
At the time of writing this report, Bitcoin price It is floating around $30.5K, down 15% in the last 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