- Crypto markets breakout liquidating millions in shorts.
- The one-month Bitcoin and Gold realized correlation continues to fall.
Crypto markets rallied Monday morning with Bitcoin breaking past $12,000 for the third time this month. The popular cryptocurrency is currently trading at $12,350. Monday morning’s rise has resulted in massive short liquidations. According to cryptometer.io, over $45 million in crypto longs have been liquidated in the last 24-hours on BitMEX alone.
Opening shorts allow traders to make money when the price of the asset falls. Some traders may also utilize leverage trading which comes with additional risks.
Through leverage trading, traders can borrow funds and trade with a greater trading power. For example, to short 1 Bitcoin with 10x leverage, the trader only contributed 0.1 Bitcoin to the position and borrows the rest. Therefore, traders can amplify returns on the 0.1 Bitcoin by 10x through leverage trading.
However, leverage comes with its own risks. While leverage can amplify returns, it can also amplify losses at the same rate. For example, a 10% move in the opposite direction on a 10x leverage trade may result in liquidations where the traders loses their entire initial contribution.
Bitcoin – Gold Correlation Falls
Bitcoin, the largest cryptocurrency by market cap, is often dubbed as the “digital gold” as it shares certain similarities with gold such as limited supply and scarcity. Like Bitcoin, gold has seen a significant rise in value amid the pandemic. Subsequently, both assets have been seeing record levels of correlation, The Crypto Associate previously reported.
However, data by Skew shows that the one-month correlation is now dropping. As of August 14, the one-month correlation stood at 48%.
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