Cryptocurrency market continues to be ‘leveraged’, which means bitcoinIt continues to decline (less than 10%), leading to a massive liquidation.
The general correction in the cryptocurrency market continues as more traders decide to take profits and exit the market, leading to massive liquidation volume on various exchanges for those who decide to leave their positions open.
The 24-hour liquidation volume on multiple centralized exchanges has already reached $640 million since Bitcoin continued to drop further. Bitcoin’s price has dropped more than 8% in the last 24 hours.
Previously, Bitcoin faced an 8% drop that started on November 15. Due to the large number of leveraged positions, approximately $500 million worth of liquidations were seen in the market in about 24 hours.
Near liquidation volume, the previous rally still appears to have been triggered by a large number of over-leveraged positions. High leverage is a system that allows investors to get more results from their position in the market by using funds borrowed from exchanges.
A highly leveraged position usually has its own characteristics such as high volatility, low liquidity, and a swing-like structure. Previously, market participants could see the high volume of the leveraged position in May, when Bitcoin reached its native ATH and then retraced by almost 50%.
In the last few months, several centralized exchanges have implemented safe trading practices by limiting the leverage available, bringing it closer to the rates applied at traditional financial institutions except for choosing the “x100” leverage option, which became the industry standard in 2017.
It should also be remembered that central bank regulators and commissioners often criticize cryptocurrency trading for the market manipulations traders are exposed to due to overly leveraged markets.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.