In this week, Bitcoin “collapsed” after reaching historical maximums.
Liquidations are common when the price increases its volatility.
The recent collapse of Bitcoin (BTC) from historical maximums charged its victims: leverage trailers. These investors lost a massive amount of money with the bearish movement of cryptocurrencies.
According to data Of Coinglass, the traders recorded liquidations for a total close to USD 500 million in the last 24 hours. The adjustment occurred after a decoration of the price of BTC, which went from a new historical maximum of USD 124,400 to the current USD 118,800.
At the time of this publication, the cryptonotic price calculator shows that BTC is traded at $ 118,907.
Despite the magnitude of the movement in nominal terms, the fall represents a 4.5%correction, which maintains the bitcoin upward trend. However, for traders with leverage positions, the setback did imply immediate losses.
The Coinglass chart, which collects added data from all cryptocurrencies and not only bitcoin in the main exchanges, shows that Much of the liquidations concentrated on long positions. This means that operators who “bet” for an increase in prices saw their operations closed automatically by not being able to cover the guarantees required by the platforms.
Liquidations are a habitual mechanism in markets with high leverage and high volatility. When the price moves quickly in the opposite direction to the “bet” of a trader, the exchange executes the sale or purchase necessary to close the position, avoiding greater losses for the platform.
On this occasion, Bitcoin’s previous rebound to a historical maximum encouraged the opening of long positions with high leverage, taking advantage of the upward trend. However, the downward turn took those who expected a new immediate impulse. The result was a series of chained settlements that affected both Bitcoin and the rest of the market.
