As Bitcoin dropped under $26,000, the crypto futures market experienced nearly $300 million in liquidations over the last 24 hours, according to data. A futures contract is a type of derivative security that allows two parties to agree on buying or selling an asset at a future date for a certain price. When a futures contract is “liquidated”, it means that the exchange where the contract was traded closes the position forcefully to prevent further losses.
Crypto Futures Market in Turmoil
Nearly $300 million worth of crypto futures positions were liquidated across major exchanges, such as Binance, Huobi, OKEx, and BitMEX. The majority of the liquidations were long positions, meaning that traders who expected the price of Bitcoin to rise were forced to close their contracts at a loss.
The liquidations were triggered by a sharp drop in the price of Bitcoin, which fell from around below the $26,000 mark in less than an hour. The price decline was a direct result of the SEC lawsuit against Binance and its CEO.
Crypto futures are not for the faint-hearted, but for those who have the knowledge, skills, and appetite for risk. They offer a way to profit from both rising and falling markets, as well as a hedge against price fluctuations. However, they also require constant monitoring and adjustment of positions, as well as sufficient collateral to avoid liquidation.
According to data from Coinglass, the total amount of crypto liquidations in the last 24 hours was around $296 million. However, most of these liquidations ($280 million) happened in the first 12 hours of this period, coinciding with the sharp price fluctuations of assets like Bitcoin. This means that only $16 million worth of liquidations occurred in the second half of the day, indicating a lower level of volatility and risk for traders.
The news of the SEC filing a lawsuit against Binance and its CEO for violating US securities laws has triggered an abrupt sell-off in the crypto market, especially for BTC. The price of BTC has plunged below the $26,000 mark during this turbulent event, resulting in a massive liquidation of long positions worth $271 million.
