Data shows around $117 million in Bitcoin futures has liquidated within the last 24 hours as the price of the crypto slumps down to $40k.
Bitcoin Futures Market Observes $117 Million In Liquidations Over The Past Day
Today, the price of BTC has fallen down to $40k, and accompanying this move has been around $117 million in futures liquidations.
In case you aren’t aware of what liquidations are, it’s best to get an overview of how the Bitcoin margin trading works first. Basically, when investors put a buy or sell order in a derivatives exchange, they also put forth some collateral, called the margin.
Against this collateral, holders can borrow amounts many times their position, called the leverage. The benefit of using leverage is that investors can earn many times more profit than their initial positions would provide.
Related Reading | ProShares Bitcoin ETF Reaches Milestone AUM, Breathes Life Into CME
However, the reverse also holds true. If the price moves opposite to the direction they bet on, their losses would also magnify by the same amount as their leverage.
After a certain amount of the initial position has been lost, the user is forced to close the position. This is precisely what a liquidation is.
Since the crypto market is highly volatile and users often make use of 10x or higher leverage, futures liquidations are commonplace.
Now, below is the Bitcoin liquidation data for the past 24 hours
Looks like there has been a high degree of liquidations over the last day | Source: CoinGlass
As you can see above, more than $117 million in Bitcoin futures contracts got liquidated in the last 24 hours, as the price of the coin fell down.
Related Reading | Bitcoin Observes Big Outflows For 3rd Straight Week As Price Continues Recovery
Also, most of the liquidations seem to be because of long contracts, which is what one would expect to happen when the price moves down.
At the time of writing, Bitcoin’s price floats around $40.4k, down 7% in the last seven days. Over the past month, the crypto has lost 4% in value.
The below chart shows the trend in the price of the coin over the last five days.
BTC's price seems to have sharply plunged down over the last twenty-four hours | Source: BTCUSD on TradingView
Just a week ago, the price of Bitcoin had again climbed above the $45k mark, but the recovery didn’t last too long.
However, a couple of days back the value of the coin once again approached the level, but it failed to touch it in the end. Then over the past twenty-four hours, BTC has shown sharp downtrend as the crypto has fallen down hard to $40k.
Featured image from unsplash.com, chart from TradingView.com
- Bitcoin ETF
- Bitcoin Futures
- Bitcoin Price
- Crypto Market
- margin trading