Crypto Liquidations Surpass $830 Million As Bitcoin Crashes

Liquidations in the crypto market have amounted to more than $830 million in the last 24 hours, as Bitcoin has crashed below the $18k level.

$832 million in crypto futures were liquidated in the last day

In case anyone is unaware of what a “liquidation” is, it’s best to get a brief understanding of how margin trading works first, before diving into the data.

When an investor opens a cryptocurrency futures contract on any derivatives exchange, they must first provide collateral, called the “margin.” This amount can be both in USD and in a crypto such as Bitcoin.

Against this margin, the investor can choose to take on “leverage”, a loan value that is often many times higher than the original position.

The advantage of leverage is that if the price of the asset moves in the direction the contract holder bet on, the profit earned is greater by the same factor as the leverage.

However, it is also true that in case the bet fails and the price swings in the opposite direction, the losses will also be much larger.

When such losses eat away a certain part of the margin, the exchange must forcibly close the position. This is exactly what a liquidation is.

Now, here is the data for the liquidations that took place in the crypto market in the last day:

Looks like a massive amount of liquidations took place during the past day | Source: CoinGlass

As you can see above, there has been a total flush of about $832 million in the crypto market in the last 24 hours.

Almost $200 million of these occurred in the past twelve hours, suggesting that the bulk of the futures flush occurred in the preceding 12-hour period. This trend makes sense as cryptos like Bitcoin observed higher volatility during this period.

Additional data reveals that 72% of the contracts involved in this liquidation squeeze belonged to the long traders; another fact that is not surprising as most of the liquidations were triggered by crashes in BTC and other crypto prices.

BTC price

At the time of writing, Bitcoin’s price is hovering around $17.5k, down 13% in the last week. Over the past month, the crypto has lost 9% in value.

Below is a chart showing the trend in the price of the coin over the last five days.

The value of the crypto seems to have observed some sharp downtrend during the past couple of days | Source: BTCUSD on TradingView

Featured image from mana5280 on Unsplash.com, chart from TradingView.com