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Bitcoin crash liquidates more than US$400 million in purchased operations
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The cryptocurrency market has faced a significant shakeout in the last 24 hours. The price of Bitcoin (BTC) dropped sharply from $106,000 to $98,000generating a ripple effect across the entire crypto ecosystem.
Although the value has partially recovered and is now trading at $102,000the impact of the fall was profound.
In the futures market, losses exceeded US$400 millionas revealed by data from the Coinglass. The vast majority of these liquidations occurred in positions long (bought)that is, traders who bet on the price rising.
The rest of the settlements corresponded to positions shorts (sold)who speculate about falling values.
What caused the fall in Bitcoin?
These liquidations represent the forced closing of leveraged positions, a strategy widely used in the futures market. With the leverageinvestors use capital borrowed by exchanges to widen your bets.
However, when the price movement is contrary to the trader’s expectations and losses exceed the initial margin deposited, exchanges liquidate positions to avoid greater losses.
The fall in the price of BTC was attributed to statements by the chairman of the United States Federal Reserve, Jerome Powell. At a press conference following the Federal Open Market Committee meeting (FOMC), Powell stated that the institution has no intention of keeping Bitcoin in its reserves, reinforcing that this decision is up to Congress.
Thus, the statement provoked a negative reaction in the markets, fueling uncertainty among investors.
These statements arise in a context of political tension, as donald trumpUS president-elect, promised to create a strategic national Bitcoin reserve. The contradiction between the Federal Reserve’s plans and policy proposals may have amplified market fears.
THE settlement of more than US$400 million in long positions highlights the risks of leverage in times of high volatility. Although the strategy allows for substantial profits when executed well, it also exposes investors to severe losses.
Bitcoin crash liquidates more than US$400 million in purchased operations
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Bitcoin crash liquidates more than US$400 million in purchased operations
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Bitcoin crash liquidates more than US$400 million in purchased operations
