Data shows the crypto futures market has taken a $380 million beating over the past day as Bitcoin has rebounded above $30k. Out of this amount, $240 million liquidations have belonged to short traders.
Crypto Shorts Observe $240 Million In Liquidations Over Last 24 Hours
In case anyone isn’t aware of what “liquidations” are, it’s best to first take a brief look at the workings of margin trading in the crypto futures market.
When an investor opens a, say, Bitcoin long or short contract at a derivatives exchange, they first have to put forth some collateral called the “margin.” This margin can be in BTC, any other coin, or even fiat.
Against this margin, the investor may choose to take on “leverage,” a loaned amount often many times the initial position.
The advantage of leverage is that if the price moves in the direction the contract bet on, the profits earned are then many times more now.
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