Bitcoin fell nearly $ 2,000 this morning, “liquidating” $ 200 million in futures positions in the past 12 hours and bringing down much of the crypto market.

Liquidation, for the uninitiated, occur when leveraged positions are automatically closed by exchanges / brokerages as a “safety mechanism”. Futures and margin traders – who borrow capital from exchanges (usually in multiples) to place larger bets – set up a small amount of collateral before placing a trade.

As the spot market falls, forward positions parallel decline and trigger predetermined liquidation levels, which differ based on the amount of leverage and the initial capital used. This creates a kind of cascading effect, causing a sudden sharp drop … and unpleasant consequences.

Bitcoin rekts everything else?

This morning alone, crypto “longs” worth $ 185 million were obtained rekt while Bitcoin fell thousands of dollars, while $ 14 million on the “short” side was sold off. “Long” traders bet on higher asset prices and get stopped when prices fall, “short” traders, on the other hand, bet on lower prices and are liquidated if prices go up.

Of that $ 185 million, $ 122 million came from Bitcoin positions alone. Ethereum posts lost more than $ 44 million, while XRP posts lost $ 12 million.

Over $ 90 million of all liquidations took place at the Bybit futures powerhouse alone. OKEx was next in that line with $ 48 million, while Binance traders suffered $ 37 million in damages.

Meanwhile, Bitcoin continues to be in a narrow price range. The asset has traded (mostly) between $ 30,000 and $ 37,000 over the past few weeks, showing no signs of a clear breakout.

Millions of dollars are still liquidated despite the lack of price movements. I wonder what this shows.

Like what you see? Subscribe for updates.