Crypto Shorts See $240M Flush As Bitcoin Rebounds Back Above dollar30k
Categories: Bitcoin US
Crypto Shorts Observe $240 Million In Liquidations Over Last 24 Hours In case anyone isn’t aware of what “liquidations” are, it’s best to first take a brief look at the workings of margin trading in the crypto futures market.When an investor opens a, say, Bitcoin long or short contract at a derivatives exchange, they first have to put forth some collateral called the “margin.” This margin can be in BTC, any other coin, or even fiat.Against this margin, the investor may choose to take on “leverage,” a loaned amount often many times the initial position.The advantage of leverage is that if the price moves in the direction the contract bet on, the profits earned are then many times more now. However, it is also true that any losses incurred will also be multitudes more. When such losses eat up a specific portion of the margin, the exchange forcefully closes off the Bitcoin position.This is what a liquidation is. The below table shows the data for liquidations in the crypto market over the past day.Large liquidations like today’s aren’t particularly uncommon in the crypto market. There are a couple of reasons behind this.The first is the high volatility of coins. Even the biggest coins like Bitcoin and Ethereum can observe rather large swings in a short timespan.The other factor that contributes to this is the fact that many derivatives exchanges offer as high as even 100x leverage.Uninformed traders opting for such large positions in a volatile market like crypto greatly increases the risk of liquidations.