Around $117 million in Bitcoin futures has been liquidated in the previous 24 hours, as the cryptocurrency’s price has fallen to $40k.
Over The Last Day, The Bitcoin Futures Market Saw $117 Million In Liquidations
Today, the price of Bitcoin has dropped to $40k, accompanied by around $117 million in futures liquidations.
If you’re unfamiliar with liquidations, it’s best to first have an understanding of how Bitcoin margin trading works. In essence, when investors place a buy or sell order on a derivatives market, they must also provide collateral, referred to as margin.
Holders can borrow multiples of their position against this collateral, referred to as leverage. The advantage of leveraging is that investors might earn many times the profit on their initial positions.
The converse is also true. If the price goes in the opposite direction of the direction on which they bet, their losses will be magnified by the same factor as their leverage.
After a certain percentage of the initial position is lost, the user is obliged to close it. This is precisely the purpose of a liquidation.
Due to the significant volatility of the cryptocurrency market and the frequent usage of 10x or greater leverage by users, futures liquidations are prevalent.
Now, this is the data for the last 24 hours’ Bitcoin liquidation.
As seen above, almost $117 million in Bitcoin futures contracts have been liquidated in the previous 24 hours as the coin’s price has fallen.
Additionally, the majority of liquidations appear to be due to long contracts, which is consistent with what one would expect to happen when the market swings lower.
Bitcoin’s price is hovering around $40.4k at the time of writing, down 7% in the last seven days. The cryptocurrency has lost 4% of its value in the last month.
The chart below illustrates the coin’s price trend over the previous five days.
Only a week ago, the price of Bitcoin rose back above the $45k barrier, but the recovery was brief.
However, a couple of days ago, the coin’s value reached the level once more, but ultimately fell short. Then, during the last twenty-four hours, BTC has seen a severe downturn, with the cryptocurrency plummeting to $40k.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.