Home Markets Crypto Market Sees $510M Futures As Bitcoin Surpasses $24.5K

Crypto Market Sees $510M Futures As Bitcoin Surpasses $24.5K

Crypto Market Sees $510M Futures As Bitcoin Surpasses $24.5K

Data shows that the crypto futures market saw over $500 million in liquidations as Bitcoin surged above the $24.5,000 mark.

The crypto futures market has seen a surge of $510 million in the past 24 hours

In case anyone doesn’t know what a “wind-up” is, it’s best to briefly understand how margin trading works on derivatives exchanges.

When an investor opens a crypto futures trading contract, they must first provide an initial guarantee, called margin (which can be both in USD or in a coin like Bitcoin).

Against this margin, holders can choose to takeleveragewhich is a loan amount often several times greater than the initial position.

The benefit of this leverage is that if the price of the asset the contract is for ends up moving in the direction the user is betting on, the profits are that many times greater than the leverage.

However, it is also true that any loss incurred will also be magnified by the same factor as leverage. When such losses accumulate and eat away at a specific part of the margin, the exchange forcibly closes the position.

This is precisely what a liquidation is. Below is the data for liquidations in the crypto futures market over the past 24 hours.

Crypto and bitcoin liquidations

Looks like the cryptocurrency market has seen a large amount of liquidations today | Source: CoinGlass

As you can see above, just over $510 million has been dumped from the crypto futures market in the past day.

Nearly 80,000 traders were involved in this flush, and around $216 million of the total liquidations took place in the last twelve hours alone.

More than 60% of liquidations came from short contracts, a trend that makes sense as a rise in the price of Bitcoin and other coins was driving the majority of the flush.

Massive liquidation events like the one today are not particularly uncommon in the crypto market. The reasons behind this are high volatility among most coins and easy access to huge amounts of leverage (many exchanges even offer 100x initial position).

Due to these factors, uninformed margin trading in the cryptocurrency industry can be quite risky.

BTC price

At the time of writing, The price of bitcoin is floating around $24.7k, up 7% in the past week. Over the past month, the crypto has gained 18% in value.

The chart below shows the price trend of the coin over the past five days.

Bitcoin Crypto Price Chart

The value of the crypto seems to have spiked up during the last couple of days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, chart from TradingView.com


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