Data shows the crypto futures market has observed around $212 million in liquidations during the past day as Bitcoin has surged above $24,000.
Crypto Liquidations Measure About $212 million In Last 24 Hours, 88% Shorts
To open any contract on the crypto futures market, the holder has to first put forth some initial collateral. A “liquidation” occurs when the holder’s bet fails (meaning that the price of the asset moves in a direction opposite to the one the investor bet on) and a specific percentage of this initial collateral has been eaten away by the losses.
This percentage may differ from platform to platform, but when the losses hit this mark, derivative exchanges generally forcibly close the position (or “liquidate” it).
One factor that increases the risk of any contract being liquidated is leverage. Against the initial position, any holder can opt to take on some leverage, which is a loan amount that is often multiple times more than the position itself.
While leverage
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