$170M In Futures To Be Liquidated As Bitcoin Recovers Above $38k

Data shows that more than $170 million worth of Bitcoin futures has been liquidated in the past 24 hours as the crypto’s price rebounds sharply above $38k.

BTC Price Recovers Sharply From Crash Due To Russian Invasion Of Ukraine

After the start of the Russian invasion of Ukraine yesterday, Bitcoin’s price took a deep dive as investors pulled out of the market. During this crash, the value of the coin dropped to $34.4k.

Today, however, the value of the crypto already seems to have recovered somewhat sharply as the price reached $39k earlier in the day.

At the time of writing, Bitcoin price is hovering around $38.8k, down 4% over the past seven days. Over the past month, the crypto has gained 7% in value.

The chart below shows the trend in the price of BTC over the past five days.

The price of BTC has recovered strongly today | Source: BTCUSD on TradingView

Bitcoin Futures Liquidations In The Past Day Reach Over $170 Million

As a result of this sharp rise in price, there have been some massive liquidations in the futures market. If anyone is unfamiliar with what a “liquidation” is, it’s best to get a quick overview of margin trading first.

As you may know, when buying or selling futures on a derivatives exchange, investors must make an initial investment called the ‘margin’.

Against this margin, users can borrow Bitcoin amounts that are many times higher than their actual position. This is called using “leverage”. Any profit investors earn on this leverage is theirs to keep.

Related literature | Bitcoin Investors Haven’t Responded (Yet) To Russia-Ukraine War With Huge Influx

However, if the price of the coin moves opposite to the direction they are betting, then their losses are also so many times greater than the leverage. After the user has lost a large percentage of his margin due to these losses, the exchange forcibly closes the position. This is exactly what a “liquidation” is.

Here is the latest data on Bitcoin futures liquidations:

It seems that the futures market has seen some massive liquidations in the past day | Source: CoinGlass

As you can see above, over $170 million worth of Bitcoin futures contracts have been liquidated in the past 24 hours.

Related literature | Bloomberg Strategist: Now Is The Decisive Time To Buy Bitcoin

Since these liquidations happened because of a sharp price increase, most of these come from short contracts.

While this is a sharp and unexpected recovery for the crypto, it is unclear how long it will last. The macro fears and uncertainties emanating from the war between Russia and Ukraine are still rife as the invasion continues.

Featured image from Unsplash.com, chart from TradingView.com

Leave a Comment