In the last 24 hours, the Cryptocurrency market experienced its largest daily liquidation since December 2021, with accumulated losses exceeding $1 billion, according to Coinglass.
This occurred after Bitcoin (BTC), the main currency in the market, had a 10% drop that led it to be listed at $93,000 yesterday December 5th.
The move occurred after will reach an all-time high of $103,900 on December 4, triggering a wave of selling by investors taking profits.
Such a situation in the market generated notable volatility. However, today bitcoin has recovered part of its value and is currently trading at $98,200as seen in the following graph of TradingView.
BTC price. Source: TradingView.
Approximately $816 million of the liquidations were long positions, while $280 million came from short positions, according to Coinglass data.
Cryptocurrency settlements. Source: Coinglass.
In the specific case of bitcoin, it was the crypto asset with the most liquidations. These were in long positions 416 million dollars and 70 million in short positions.
Bitcoin was followed by ether (ETH), Ethereum‘s cryptocurrency, with $68 million long and $16 million short. Solana (SOL), for its part, was $16 million long and $5 million short.
What are long and short positions?
Long and short positions are common strategies in cryptocurrency investing. A long position involves buying with the expectation that the price will increasewhile a short position in the futures market is taken when the price is expected to fall and allows profit from that fall.
Liquidations occur when prices move against these leveraged positions, leading exchanges to automatically close trades to prevent further losses.
Leverage is a financial strategy offered by exchanges to increase profits that can be received on an investment, as explains Cryptopediaeducational section of CriptoNoticias.
The sharp sell-off affected prices because it removed a significant volume of contracts from the market. These leveraged trades act as a liquidity engine, and their abrupt closure puts additional pressure on prices.amplifying bearish or bullish movements depending on the direction of the liquidated positions.
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