By 17:30 Moscow time, the prices of BTC and ETH are at the levels of $79.1 thousand and $2.22 thousand, respectively – both assets have updated two-week lows. At the same time, 95% of cryptocurrencies from the list of the 100 largest by capitalization in the past hour fell in the range of up to 6%, RBC reports.
Against this backdrop, crypto exchanges liquidated the positions of tens of thousands of traders for a total of $212 million in the past hour, according to Coinglass. Of this amount, $208 million was accounted for long positions (longs) – those who bet on the growth of rates. The main losses were on the bitcoin and Ethereum markets – more than $120 million. For comparison: during the day the sum of liquidated trading positions amounted to $523 million, almost $390 million of which were longs.
When talking about liquidations in the crypto market, most often we are talking about the forced closing of positions on perpetual futures (perpetual futures or perps). They allow trading with high leverage for amounts exceeding the trader’s own capital.
For example, with a leverage of 10x, a trader with a deposit of $10,000 can open a position for $100,000. If the market moves against the trade, losses reduce his collateral. When the collateral becomes insufficient to maintain the position, the exchange automatically closes (liquidates) it to avoid losses. The higher the leverage, the smaller the price movement can lead to liquidation.
Aggregator sites like Coinglass take into account the full nominal size of the position with leverage in their liquidation statistics, not just the trader’s own funds. For example, a $100 position with a leverage of 10x will be reflected in the amount of losses as $1k.
Decrease of quotations in the last hours was not accompanied by any negative news background or macroeconomic data release. One of the most notable news on May 15 was the statement of Strategy company, which allowed the repayment of its obligations to investors, including through the sale of bitcoins. The company reports that the sale of bitcoins is possible if it is more profitable for shareholders than an additional share issue.
These reports are in stark contrast to founder Michael Saylor’s repeated statements that “you should never sell your bitcoin.” And one of his loudest expressions was “sell a kidney if you have to, but keep your bitcoin.”
