- Nearly $80 million in crypto longs were liquidated as Bitcoin fell to $9,300.
- Over $1 billion worth of Bitcoin options open interest is due to expire Friday.
Bitcoin fell 4% early Wednesday triggering a wave of long liquidations across cryptocurrency markets. According to cryptometer.io, this value neared $80 million at the time of press. While the data likely incorporates liquidation data among all crypto pairs, Bitcoin accounts for the majority of these liquidations.
Bitcoin long positions allow traders to make money on Bitcoin’s price rising in the future. However, many traders use leveraged positions, meaning that traders borrow a significant portion of position in order to amplify gains.
For example, a trader opening a 1 Bitcoin long with 10x leverage will fund the positions with 0.1 Bitcoin of their Bitcoin and then borrow the other 0.9 Bitcoin. If Bitcoin rises 5% and the trader decides to close the position, they will realize gains on the entire position and then pay back what was borrowed. The trader effectively realized 50% gains without factoring in fees. Through leverage, traders can open large positions and thus realize greater gains.
However, leverage trading is substantially riskier than traditional trading. While leverage amplifies gains, it also amplifies losses. Traders opening a Bitcoin long with 10x leverage will lose their entire position if Bitcoin drops 10%. While this may seem like a substantial amount, exchanges offer leverage options far higher than 10x, meaning a small price slippage can result in a wave of liquidations.
The cryptocurrency made a move upwards earlier this week, triggering a wave of short liquidations, The Crypto Associate reported.
Massive $1 Billion Plus Expiry Looms
As nearly $80 million in crypto longs are liquidated, an even more significant event is developing. As reported by The Crypto Associate, over $1 billion in Bitcoin options open interest is due to expire this week.
According to Skew, a cryptocurrency data analytics platform, 114,700 Bitcoin worth of Bitcoin options open interest is due to expire Friday, June 26.
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