The data indicates that $170 Million in Bitcoin Futures have been liquidated during the past 24hrs as Bitcoin prices rise above $38k.
BTC Price Makes Sharp Recovery From Crash Due To Russia’s Invasion Of Ukraine
The price of Bitcoin plunged after the Russian invasion began yesterday. Investors pulled out. During this crash, the coin’s value went as low as $34.4k.
Today, however, the cryptocurrency’s value seems to be on the rise as it hit $39k in just a few hours.
At the time of writing, Bitcoin’s price floats around $38.8k, down 4% in the last seven days. The crypto’s value has increased by 7% over the last month.
Below is a chart showing the change in BTC’s price over the past five days.
Today's sharp rebound in BTC prices has been reported by TradingView| Source: BTCUSD on TradingView
There have been more than $170million in Bitcoin futures liquidity transactions over the last day
This sharp price increase has led to mass liquidations of the futures market. In case someone isn’t familiar with what a “liquidation” is, it’s best to get a quick overview of margin trading first.
As you may know, when investors purchase a buy or sell futures contract on a derivatives exchange, they have to put forth some initial investment, called the “margin.”
This margin allows users to borrow Bitcoin amounts that are many times greater than their actual position. This is called making use of “leverage.” Any profit that investors earn on this leverage is theirs to keep.
Bitcoin Investors Haven’t Responded To Russia-Ukraine War With Large Inflows (Yet)| Bitcoin Investors Haven’t Responded To Russia-Ukraine War With Large Inflows (Yet)
But if the currency’s price moves in the opposite direction to what they had predicted, the user will lose twice as much as their leverage. The exchange will force the user to close the position if they lose a significant amount of their margin due to these losses. This is precisely what a “liquidation” is.
Here are the most recent data on the Bitcoin futures liquidations.
Source: CoinGlass| Source: CoinGlass
Over $170 Million in Bitcoin Futures Contracts have been liquidated during the past 24 hour, as you can see.
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These liquidations were caused by a sharp rise in the price of commodities. The majority are short-term contracts.
While this is a sharp and unexpected recovery for the crypto, it’s unclear how long it will last. As the Russian-Ukraine invasion continues, macro worries and uncertainty are still prevalent.
Featured image taken from Unsplash.com. Chart from TradingView.com.