$7 million ‘liquidated’ after Bitcoin drops $1,000 in 30 minutes
It is never a good sign when something called “Bitcoin” drops $1,000 in 30 minutes.
Bitcoin’s value dropped from $14,000 to $9,200 in less than an hour, which is most likely due to the increase in trading volume by the Chinese.
How do you know when the price of Bitcoin just fell $1,000 in 30 minutes? The Winklevoss brothers tell you. The twins bought $7 million worth of Bitcoin in 2013, then watched as it’s value plunged to $1,000 in the next 30 minutes. To the twins, it looks like Bitcoin crashed and burned.. Read more about when was bitcoin at its lowest and let us know what you think.
Bitcoin suddenly plunged to $1,000 this morning, taking other cryptocurrencies with it and generating $7 million in liquidations, according to data from multiple sources.
Liquidation, for the uninitiated, occurs when leveraged positions are automatically closed by exchanges/brokers as a safety mechanism. Futures and margin traders, who borrow capital from the exchanges (usually in varying amounts) to make large bets, post a small amount of collateral before making a trade.
The move follows a tumultuous weekend in which the asset fluctuated between the $33,000 and $35,500 price zone. This morning, however, bitcoin failed badly near $35,500, losing more than $1,000 in just 30 minutes.
As you can see on the chart below, buyers intervened at the $34,000 level, temporarily suspending the decline. However, at the time of publication, bitcoin is trading below its 34-period moving average – a tool used by traders to determine market trends based on price history – suggesting that the price will continue to fall in the coming hours.
Image: BTC/USD via TradingView.
Long traders pay the price of cryptocurrency
The downward move also caused other cryptocurrencies to fall along with bitcoin, costing long traders more than $7 million. According to Bybt’s analysis tool, over 89% of all futures traders went long (or bet on rising prices) and lost over $7.69 million in total.
The Bybit futures market closed $3.6 million worth of long positions. OKEx and Binance followed with liquidations of $1.45 million and $1.28 million, respectively.
Bitcoin accounted for the most liquidations with $4.2 million, followed by Ethereum with $2.5 million and XRP with $614,000.
11% of the short traders were also liquidated, with a loss of $914,000 (although the short traders were gambling on a price drop, they were able to use more leverage, so they too were liquidated).
Meanwhile, this case shows once again that while the recent adoption (or consideration) of bitcoin as a currency in some countries has the potential to change the narrative, it remains a highly volatile asset class that is still in its infancy.
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