- Bitcoin is up nearly 3% after falling below $9,000.
- Nearly $10 million in Bitcoin shorts were liquidated on BitMEX in the last 24-hours.
After days of declining price action, Bitcoin bulls have pushed the cryptocurrency’s price back above $9,000. With Bitcoin up nearly 3% trading at $9,300, Monday’s early morning move triggered a wave of short liquidations.
According to cryptometer.io, millions in Bitcoin short positions were liquidated in the last 24-hours.
Bitcoin short positions allow traders to make money if the price of Bitcoin falls. For example, a trader can short one Bitcoin by selling a Bitcoin at the current market price. If Bitcoin falls in price, the trader can then repurchase the one Bitcoin at a lower price and net the difference.
Furthermore, traders can also use leverage to open short positions. With leverage trading, traders borrow of the position they are opening. For example, a trader opening a one Bitcoin short with 5x leverage will fund the position with 0.2 Bitcoin and borrow the other 0.8 Bitcoin. The trader will then sell the one Bitcoin at market price. Assuming Bitcoin falls and the trader wants the close the position, they will then buy one Bitcoin and pay back the 0.8 Bitcoin they borrowed. Through this, the trader was able to trade with more substantial trading power and realize greater gains.
However, leverage comes with its own risks. For example with 50x leverage, if Bitcoin moves 2% in the opposite direction, the trader’s position will be liquidated and they will lose their entire contribution to the position. Therefore, even relatively minor price fluctuations may result in liquidations if not careful.
Bitcoin Outperforms Gold YTD
While sharing some similarities, including a limited supply and scarcity, the popular digital asset has been outperforming gold year-to-date (YTD), as previously reported by The Crypto Associate.
Despite Bitcoin currently outperforming gold year-to-date, both assets are up substantially this year amid the economic uncertainty.
Cover Image by: Nick Chong via Unsplash
Disclaimer: Content displayed on thecryptoassociate.com is not investment advice. Investors should do their own research before investing in digital assets or anything displayed on this site. The Crypto Associate does not recommend trading any sort of investment in cryptocurrencies and digital assets. The Crypto Associate is not responsible for any losses incurred due to the buying or selling of cryptocurrencies displayed on this site. All content is for informational purposes only. The Crypto Associate does not endorse, affiliate or represent any third-party links including advertisements. The Crypto Associate participates in affiliate marketing. Read the full disclaimer