- Bitcoin rapidly fell below $11,000 on several exchanges after briefly breaching $12,000 for the first time in months.
- Over $140 million in Bitcoin longs have been liquidated in the last 24-hours on BitMEX alone.
After rallying past $12,000, a level not seen this year, Bitcoin plummeted back below $11,000 on several cryptocurrency exchanges. The cryptocurrency has recovered slightly and is now trading at $11,200. Ethereum is currently trading at $375.
Millions In Crypto Longs Liquidated
According to Cryptometer.io, over $140 million in Bitcoin longs were liquidated in the last 24-hours on BitMEX alone.
Bitcoin long positions allow traders to bet on Bitcoin’s price rising in the future. Some traders also utilize leverage trading 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 one Bitcoin position with 10x leverage, the trader only contributes 0.1 Bitcoin to the position and borrows the rest. Through leverage, the trader has the trading power of one whole Bitcoin and, therefore, amplifies potential returns on the 0.1 Bitcoin by approximately 10x.
However, leverage trading also comes with its own risks. Leverage also amplifies losses at the same rate it amplifies gains. For example with 10x leverage, a 10% move in an opposite direction may result in Bitcoin long positions being liquidated 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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