Crypto Shorts See $240M Flush As Bitcoin Rebounds Back Above $30k
13 Maio 2022 - 4:00PM
NEWSBTC
Data shows the crypto futures market has taken a $380 million
beating over the past day as Bitcoin has rebounded above $30k. Out
of this amount, $240 million liquidations have belonged to short
traders. 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. Related
Reading | Bitcoin Bloodbath Awakens Sleepy Giant As Spot
Volumes Surge 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. 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 some heavy liquidations over
the past day, with $184 million coming in the past 12 hours alone.
A majority of the liquidations have been from short traders, which
makes sense as coins like Bitcoin have observed a big rebound in
the price today. Around 63% of the liquidations have involved
shorts | Source: CoinGlass Looking at the above data, it seems like
more than $240 million liquidations have been short traders getting
flushed. Related Reading | Bitcoin Crash 20% in 5 Days. Why is
it the Golden Time to Enter the Crypto Market? 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.
Bitcoin Price At the time of writing, Bitcoin’s price floats around
$30.5k, down 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
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