A 17% drop in the price of Bitcoin in 24 hours liquidated $ 5.64 billion in trading positions on derivative platforms (futures and options). Traders in these situations used the leverage (borrowing money from an exchange) to bet on the price of Bitcoin.
to the the report Coin Telegraph At the same time as the Bitcoin value fell more than 17%, the futures market witnessed a large amount of liquidation across the market.
Liquidation occurs when future positions with leverage fall below a certain threshold. For example, if the price drops by 5%, the situation becomes liquid with a 10-fold leverage; In this case, the investor loses all his money.
If the Bitcoin futures market is highly leveraged or the number of traders is too crowded, a slight price move can lead to mass liquidation.
According to analysts at Santiment Data Analysis, a specific address is responsible for the second largest bitcoin transaction this year.
More than 2,700 bitcoins were transferred just before the fall of the digital currency. The transaction was larger than the 2,000 bitcoin inflows seen before the $ 4,000 bitcoin fell in March 2020.
As we mentioned yesterday, there was an 11% jump in inbound exchanges that started the Bitcoin price correction from the historic high of $ 58,300. Further analysis of the data revealed that one address was responsible for the second largest bitcoin transaction this year, which put 2,700 tokens into the wallet and immediately sold. The same address imported 2,000 bitcoins in March last year, exactly at the same time as Black Thursday. In the year that it was created, this address has made a total of 73 transactions with a total input volume of 91,935 bitcoin units and has transferred all of them in a few minutes.
It is possible that bulk sales in the instant market have caused the futures market to see strong sales pressure from long-term buying positions that were being liquidated.
When Bitcoin entered the correction phase on February 22, the funding rate of Bitcoin futures was around 0.15%, even though the decline continued.
This trend represented two things: leveraged buyers were buying more than any price floor, and the market was still hot even when the price revived.
As a result, new buyers were continuously liquidated during the short-term downtrend, intensifying an intense cycle of cascading liquidation.
However, a trader nicknamed “Byzantine General” described it as a “coordinated earthquake” and said it was a healthy trend.
If Bitcoin fell due to so-called “strong black” news or some anomalies, there was cause for concern. But the trader emphasized the presence of a relatively high number of buy orders to show that buyers are waiting to buy at the floor.
I’m glad to see signs that this [رویداد] It was a coordinated earthquake, because it means that bitcoin is still bullish and the big players just want their orders to be filled. If it had not been planned in advance, then it would have been much more frightening.
In the short term, it is important for Bitcoin to defend its $ 45,000 support zone to ensure that the short term cycle does not enter a “downtrend”. Below this area, the likelihood of deeper and longer corrections increases rapidly.