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.
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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…