Mass liquidations followed Bitcoin's downward move after breaking the $60K resistance. Statistics show that LiquidationA liquidation is a sale of cryptocurrencies, usually forced, as a result of an investor's inability to secure a minimum margin for their leveraged position. Notorious for their volatility in the market, cryptocurrencies can quickly and easily lead to liquidation, especially when investors lose their leveraged positions and their investment plunges into negative balance, requiring them to sell crypto assets when a position is forced out. This usually happens in cryptocurrency margin trading, when investors borrow money from a crypto exchange or broker to increase their funds or assets for trading. While leveraged trading positions can lead to higher potential profits, this is a very risky move that could lead to liquidation if the price of the asset drops sharply and you lose your initial margin or equity. If you do not have enough funds to continue trading and cannot meet the minimum margin requirements for your leveraged position, the exchange may automatically close your position, resulting in a permanent loss of funds from your initial margin. This liquidation loss can be partial or total, depending on the initial margin and the extent of the price drop. A partial liquidation occurs when a position is partially closed at an early stage in order to reduce the position and the investor's leverage, while a full liquidation occurs when almost all of the initial margin has decreased due to a price drop. To better illustrate the liquidation process in cryptocurrency margin trading, here is an example: Suppose you start with an initial margin of $100 and 10x leverage. This means that your total trading position is $1, of which $000 is borrowed from an exchange or broker. The amount of leverage corresponds to the size of your profit or loss from the position. With 10x leverage, a 5% increase in the price of an asset will give you 50% profit. The same goes for a 5% drop in the price of an asset, which will result in a loss of 50% of your initial margin. The formula for calculating profit or loss is as follows: Initial Margin × (% Price Change × Leverage) = Profit/Loss. Based on the above calculation, a 10% decrease in the price of an asset will result in a loss of 100% of your initial margin. Before you lose all of your initial margin, you can get a margin call when the liquidation threshold is reached so you can decide if you want to add more equity to your margin to keep your position open (or lose your initial margin entirely when the exchange or the broker will automatically liquidate your position). When you force-close a position, the exchange or broker may charge you a liquidation fee, but you can avoid this fee if you close the position before it is liquidated. Liquidations often occur when investors are tempted by higher leverage, which can potentially bring them greater profits, but do not consider the possibility of incurring large losses, which can also lead to liquidation. Therefore, it is very important to apply smart crypto trading strategies in order to avoid liquidations, whether starting with lower leverage or carefully monitoring margins and liquidation prices. Using a stop loss order is another way to limit your losses as the order will automatically close the position for investors when it hits the stop price to prevent further losses. Investors may also consider using exchange insurance funds to protect themselves from excessive losses. over the past 24 hours amounted to about 2,24 billion dollars.
Bears have firmly established themselves in the market since the Bitcoin surge. The leading digital currency momentarily surpassed the $ 60K milestone, surging above $ 62K before rolling back.
Feeling that the market was overbought, the bears prevailed. Markets have witnessed a carnage over the past 24 hours, with the leading cryptocurrencies experiencing significant falls of 6-10%. This led to a significant decrease in the capitalization of the global cryptocurrency market. After a 5% decline, it now stands at $ 1,71 trillion.
Mass liquidations are taking place on several exchanges. In the last 24 hours alone, over 186 traders have closed their positions. Photos Bybit revealed that nearly $ 2,23 billion in futures contracts were liquidated during this period.
As expected, Bitcoin makes up a huge portion of the total liquidity. Over $ 1,74 billion in Bitcoin was liquidated, followed by $ 210 worth of Ethereum. BNB, CHZ, LTC, DOTADA and BCH list the most liquidated digital assets in the last 24 hours.
Eight major exchanges liquidated about $ 14,3 million. The Seychelles-based cryptocurrency exchange Huobi has registered the largest one-time liquidation order at $ 18,94 million.
Liquidation - nothing out of the ordinary
Such mass liquidations are common after bull runs. When bitcoin hits significant price points, many retail traders often want to take profits, usually out of fear that the markets might be overbought. When bitcoin fell 18% late last month, more than $5,6 billion was liquidated across 645 positions on major exchanges.