Data shows the crypto futures market has observed more than $500 million in liquidations as Bitcoin has surged above the $24.5k mark.
Crypto Futures Market Has Seen A Flush Of $510 Million In Last 24 Hours
In case anyone is unaware of what a “liquidation” is, it’s best to get a brief understanding of how margin trading on derivatives exchanges works.
When an investor opens a crypto futures trading contract, they have to first put forth some initial collateral, called the margin (which could be both in USD or in a coin like Bitcoin).
Against this margin, holders can choose to take on “leverage,” which is a loan amount often many times the initial position.
The benefit of this leverage is that if the price of the asset the contract is for ends up moving in the direction the user bet on, the profits are as many times more as the leverage.
However, it’s also true that any losses suffered will also be magnified by the same factor as the leverage. When such losses pile up and eat away a...
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