Derivatives positions worth nearly $6 billion have been forcibly liquidated by crypto exchanges recently. This has resulted in Bitcoin’s price dropping well below $46,000 from its previous price of $57,500 this past Monday.
Traders Tending To Overleverage In An Attempt To Gain More Benefits
It is worth pointing out that more often than not, several traders tend to over-leverage, or in other words, trade on margin. The main reason for doing this is that there is this idea that Bitcoin’s price would increase, and as such, the people who conducted these trades would benefit much more from their actions.
This is important to know as, within the previous 24 hours, a whopping $5.65 billion worth of open interest had been liquidated by several key cryptocurrency exchanges. Put simply, crypto exchanges have actually managed to liquidate traders’ overleveraged positions with minimal difficulty and maximum benefit. This report had been provided by Bybt.com.
Overleveraging Not Always As Beneficial As It May Seem
As aforementioned, the main reason why traders may tend to overleverage may be due to the thought that Bitcoin price is going to increase, and as such, there are going to be more benefits involved. However, this might not always be the case, as when Bitcoin’s price goes below the liquidation price of their respective positions, exchanges will actually be forced to liquidate.
It will, in turn, result in the positions being closed as traders simply cannot manage to maintain the margin requirements of their respective positions, which may have been leveraged in the first place.
Nevertheless, more than 600,000 traders have been liquidated since yesterday, with the most notable single liquidation order taking place on Huobi for Bitcoin itself. This trade had been valued at an agreed $20.66 million, once again, according to a report courtesy of Bybt.com. Lastly, in terms of overall crypto-assets, Bitcoin positions had comprised of the most liquidations, and this was followed by both Ethereum (ETH) and XRP in short order. As of now, Bitcoin seems to be a cut off above the rest and is thus enjoying considerably more success and benefits as compared to its competition.