Crypto market observes liquidations of $150 million as Bitcoin falls below $22,000
Data shows that the crypto futures market has seen around $150 million in liquidations in the past 24 hours as the price of Bitcoin falls below $22,000.
150 million dollars are liquidated in the crypto futures market in the last 24 hours
In case anyone isn’t aware of what “liquidations” are, it’s best to first take a quick look at how margin trading works, before diving into the data.
When a user opens a futures contract on a crypto derivatives exchange, they must first put up some initial collateral (in USD or in any coin like Bitcoin), called the margin.
Against this margin, the user may wish to take on “leverage”, which is a loan amount often many times the original position.
The advantage of this leverage is that if the price happens to move in the direction the user is betting on, then any profit is as many times greater as the leverage.
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But it is also true that any losses are also magnified. When such losses eat a certain part of the margin, the exchange closes the position by force.
This is exactly what a liquidation is. The table below shows the data for liquidations in the crypto futures market in the last 24 hours.
Looks like a large amount of liquidations have taken place today | Source: CoinGlass
As you can see above, around $150 million worth of crypto futures have been liquidated in the last day alone. This leverage flush included around 57,000 contracts in total.
A little more than $40 million of these liquidations took place in the last twelve hours, suggesting that more than $100 million was flushed out in the previous 12 hours.
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This trend makes sense as the previous twelve hours overlap with the price of Bitcoin observing a drop below the $22k mark.
In addition, almost 80% of the positions involved here were longs, another fact that is in line as most of these liquidations were triggered by a decline in the prices of the various cryptos.
Mass liquidations like today’s are not particularly unusual in the cryptocurrency world. The reasons behind it are high general market volatility and easy availability of large amounts of leverage (many exchanges even offer as high as 100x).
Bitcoin price
At the time of writing, Bitcoin’s price is hovering around $21.9k, down 2% in the last seven days. Over the past month, the crypto has increased 3% in value.
The chart below shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have dropped down during the last few days | Source: BTCUSD on TradingView
Featured image from Pierre Borthiry on Unsplash.com, chart from TradingView.com
