Bitcoin fell to under $38,500 on some exchanges, reaching levels last seen in February this year.
They pay a fixed fee for doing so, while exchanges close out these positions at a predetermined price—when the trader’s collateral is equal to the loss on that position. Such a trade is then said to be liquidated.
As per analytics tool Bybt, over $2 billion worth of cryptocurrencies were lost in such liquidations in the past day. Of that, $911 million came from Bitcoin trades alone, $462 million from Ethereum trades, and $120 million from XRP trades.
$71 million worth of ‘meme coin’ Dogecoin was liquidated as well, and layer-2 network Polygon (MATIC) saw a $40 million hit too.
Futures exchange Bybit took the bulk of those liquidations with over $534 million in rekt trades, followed by Huobi’s $521 million. 83% of all traders were ‘long’ their assets, meaning they borrowed capital to bet on even higher prices.
China FUD behind Bitcoin drop?
As such, the drop seemed to come after a Reuters article suggested China was, once again, banning crypto services among its citizens with new laws. The development was, however, not an official, government-issued stance.
Meanwhile, Bitcoin slightly recovered in the early hours to over $40,000, over $1,500 up from a wick down to $38,500 last night. It, however, as the below image shows, remains in a downtrend, but rests at a ‘resistance’ near the $39,800 price level.
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