Crypto liquidations have surged to over $238M as the price of Bitcoin spikes by 10%. Amidst the ongoing market volatility, traders who use leverage to amplify their trades are facing massive losses. The surge in liquidations has come as a surprise to many market observers, as Bitcoin’s price had been trading flat for several weeks. Experts suggest that the sudden jump in prices indicates a renewed investor interest in cryptocurrencies, fueled by the global economic uncertainty and inflation fears. With the market showing no signs of slowing down, traders are advised to be cautious and avoid taking on excessive leverage.
The last 24 hours have seen crypto futures liquidations reach $238 million due to a 10% rise in Bitcoin. Futures contract holders are required to provide an initial margin that can get liquidated if losses eat away a specific percentage of this margin. Liquidation happens when the trader accumulates losses beyond a specific degree which can differ platform to platform. Trading with high leverage and the volatility of assets like Bitcoin can lead to mass liquidation events, with uninformed trading with high leverage being especially dangerous. Of the $238 million liquidated, around $111 million happened within the last 12 hours due to a sharp rise in asset prices such as Bitcoin. The leverage flush mostly involved short contracts making it an example of a short squeeze as liquidations during squeezes typically cascade together. Bitcoin is currently trading at around $22,000, down 1% in the last week.