by • Crypto futures liquidations have hit $238 million during the last 24 hours as Bitcoin has observed an uplift of 10%.
• Leverage as high as 50 or even 100 times the initial collateral is usually pretty accessible in a lot of the platforms.
• A total of $238 million in crypto futures contracts were liquidated in the past day. Around $111 million of these took place in the last 12 hours alone.
Crypto Futures Liquidations Reach $238 Million
Crypto futures liquidations have hit $238 million during the last 24 hours as Bitcoin has observed an uplift of 10%. By “liquidation,” what is meant here is that the derivative exchange forcefully closes the contract when losses of this specific degree are accumulated (the exact percentage may differ from platform to platform).
The Risk Of Any Contract Getting Liquidated
One factor that can raise the risk of any contract getting liquidated is “leverage.” The leverage is a loan amount that a holder may choose to take on against the margin, and it is generally equal to many times the initial position itself. The benefit of the leverage is that any profits that an investor gains would now become multitudes more. However, on the flip side, any losses that the holder incurs will also be more by the same factor as the leverage.
Mass Liquidation Events In The Crypto Market
In the crypto market, mass liquidation events aren’t a particularly uncommon sight. There are mainly two reasons behind this; firstly,the general volatility of assets like Bitcoin can be quite high and secondly, leverage as high as 50 or even 100 times than initial collateral is usually pretty accessible in many platforms. These two factors combined can mean that uninformed trading with high leverage can be quite deadly in this market.
Data For The Liquidations That Have Occured
Below is data for liquidity events which have occured during past 24 hours: As you can see above, a total of $238 million in crypto futures contracts were liquidated in past day out of which around $111 million took place within 12 hours alone About 80% involved short contracts indicating bearish trend prevailing in market at present time.
Conclusion
Liquidity events occurring due to large leveraged positions taken by traders combined with volatile nature if crypto makes it difficult to predict future prices and thus requires caution while trading them using margin trading technique.
