- After a strong rally, Bitcoin struggles to break above the previous all-time high.
- Meanwhile, Bitcoin longs see millions in position liquidations.
Bitcoin continues to make headlines as it crossed its 2017 all-time high earlier this month. However, the cryptocurrency is struggling to continue the rally. The cryptocurrency is currently trading at $23,400 at the time of press. Meanwhile, millions in Bitcoin long positions see liquidation. According to cryptometer.io, nearly $8 million in Bitcoin longs have been liquidated on BitMEX alone in the last 24-hours.
Bitcoin long positions allow traders to bet on Bitcoin’s price rising in the future. Some traders also utilize leverage which can amplify gains but also amplify losses at the same rate.
Leverage trading allows traders to leverage greater trading power. For example, to open a 1 Bitcoin position with 10x leverage, the trader only contributes 0.10 Bitcoin to the position and borrows the rest. By doing so, the trader has the trading power of one whole Bitcoin and, therefore, amplifies potential returns on the 0.1 Bitcoin by approximately 10x.
While leverage trading can help traders amplify gains, it can also amplify losses at the same rate. For example with 10x leverage, a 10% move in an opposite direction may result in liquidations and the trader losing their entire initial contribution to the position. Therefore, traders trading with large amounts of leverage may face liquidations during price fluctuations.
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