Data shows the crypto futures market has observed more than $400 million in liquidations during the last 24 hours as Bitcoin breaks above $23k.
Mass liquidations in the crypto market aren’t too uncommon for a couple of reasons. First, the volatility of most coins (that are not stablecoins) is generally high and even hourly fluctuations can be sometimes quite significant.
The other reason is that large amounts of leverage is pretty accessible in most exchanges. “Leverage” is a loan value that any futures user can borrow against the margin. Many exchanges even offer figures as high as 100x the initial position.
While leverage can increase profits by magnitudes more if the bet works out, the same applies to losses as well. This, combined with the volatile nature of even the biggest coins like Bitcoin, can make uninformed margin trading in crypto futures quite risky.
Now, here is the data for the liquidations occurring in the cryptocurrency market during the last 24 hours:
As you can see above, almost $405 million was flushed down during the past 24 hours in the crypto futures market. Around $133 million of these liquidations took place in the last twelve hours alone.
A little short of 100k traders were involved in today’s liquidation squeeze and more than 50% of the contracts closed belonged to shorts.
This trend makes sense as a majority of the liquidations would have been triggered by coins like Bitcoin observing a sharp increase in their prices.
The below chart shows the trend in the price of the coin over the last five days.
