- Over $30 million in Bitcoin longs were liquidated on BitMEX, as Bitcoin fell below $9,000.
- The cryptocurrency has now recovered and is trading at $9,400.
Following a few days of declining trading action, Bitcoin rapidly fell below $9,000, only to make a recovery shortly after. The cryptocurrency’s brief fall below $9,000 triggered a wave of long liquidations on the crypto derivatives platform, BitMEX.
While BitMEX saw some short liquidations, longs accounted for over 70% of the liquidations in the last 24 hours.
Bitcoin longs allow traders to bet on Bitcoin’s price rising in the near future. Many traders open leveraged positions, allowing them to amplify gains albeit at a higher risk profile.
For example, if a trader wants to open a 1 Bitcoin long with 10x leverage, the trader will only fund the position with 0.1 BTC of their funds and borrow the rest. If Bitcoin rises 5% and the trader decides the close the position, the trader will net 50% profit on their original 0.1 BTC, excluding trading and leverage fees.
However, it is essential to remember that trading using leverage is considerably riskier. On a 20x leverage, a trader will experience losses at 20x the normal rate. For example, if Bitcoin moves down 5%, the trader will experience a 100% loss on their portion of the funds.
Bitcoin Options Open Interest Rises
While the BitMEX long liquidations is good news to bears, there may still be good news for Bitcoin bulls. Bitcoin options open interest has recently been on the rise, quantifying a greater interest in the asset.
Open interest is calculated by the total outstanding contracts at the end of the trading day. Open interest as a whole has been on the rise with CME surging in recent months, as reported by The Crypto Associate.
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