$ 500million in long bitcoin liquidated after market drops further 8%
The cryptocurrency market still remains heavily leveraged, leading to significant liquidation volume after Bitcoin fell by less than 10%
The global correction in the cryptocurrency market continues as more traders decide to take profit and exit the market leading to liquidation volume on various exchanges for those who decide to leave their positions open.
The current 24-hour liquidation volume on many centralized exchanges has already reached $ 640 million as Bitcoin continues to fall further. The price of the first cryptocurrency has fallen more than 8% in the past 24 hours.
Previously, Bitcoin was already facing an 8% drop that began on November 15. Due to a high number of leveraged positions, the market also faced a liquidation worth around $ 500 million in around 24 hours.
The same large liquidation volume indicates that the previous rally was still fueled by a large number of over-leveraged positions. High leverage allows traders to receive more results from their market positions using funds borrowed from exchanges.
A highly leveraged position usually has its own distinctive characteristics, such as high volatility, low liquidity, and a swing-like nature. Previously, market participants could see the high volume of leveraged positions in May, when Bitcoin hit its local ATH and then came back almost 50%.
In recent months, more exchanges have started to follow safe trading practices by limiting the leverage available, making it close to the rates implemented in traditional brokerage houses, ruling out the possibility of choosing the options of “x100” leverage which became the industry standard in 2017.
Regulators and central bank commissioners have often criticized cryptocurrency trading due to the market manipulation traders are exposed to due to over-leveraged markets.