Overleveraged and overly optimistic crypto traders once again lost billions amid a selloff in the crypto market.
More than USD 1bn in cryptoasset trading positions was liquidated in one hour today, bringing total liquidations to more than USD 2.3bn in the past 24 hours (194,539 positions in total), per bybt.com data.
Almost 98% of the liquidated positions are long positions, while bitcoin (BTC) accounts for around 90% of them.
At the time of writing (10:03 UTC), BTC trades at USD 55,961, dropping by 4% in an hour. The price is down by 9% in a day, trimming its weekly gains to 8%. Other cryptoassets from the top 10 list are down by 5%-11% in a day.
BTC reached its new all-time high of USD 61,712 (per Coingecko.com) on March 13.
Long liquidations have become more numerous over the past month or so. With bitcoin (and other coins) breaking all-time highs nearly every passing week, some traders may feel unable to gain significant exposure without margin trading.
However, a growing number of traders can’t afford to maintain their leveraged positions in the event of dips. Hence, the growing frequency of big liquidations.
@coinalyzetool will there be ppl left who arent liquidated when we actually reach the top :p— Bernard Black (@bernardBlack_1)
Leveraged trading refers to borrowing funds so that you can take a larger position than you would be able to with your existing funds so that you can potentially generate a higher profit. However, while margin trading enables traders to amplify their returns, it can also lead to increased losses and liquidations, which is why experienced traders tend to advise newcomers to stay away from leveraged trading.