Crypto has been a prominent financial entity for the past decade changing the way that investors diversify their portfolio. Just as stocks rise and fall because of overall economic influence, cryptocurrencies change in value as well daily.
On Thursday, August 17, 2023, the crypto futures liquidations reached a value of $153.3 million as of the last 24 hours prior. About $53 million of the liquidations occurred in the latter half of the 24 hours whereas crypto had the highest volatility during the day. Hence, this has caused the Bitcoin value to go down from $29,170.49 on August 16th to $28,754.20 on August 17th.
This was a $416.29 decrease or a 1.4% drop from the previous day’s market value. Overall, Bitcoin has experienced a 3% decrease since last week.
So what are crypto futures liquidations and why did they cause a drop in the Bitcoin value? Let’s discover why!
Crypto Is Advancing the World
Despite the drop in Bitcoin value recently, crypto continues to advance the world. Some casinos accept Bitcoin and other types of cryptocurrency as a form of payment to fund bets.
While many website does not accept cryptocurrencies to fund betting accounts, you can still enjoy to bet by funding with fiat currency. Because of the prominence of crypto being used to pay for goods and services, it is only a matter of time until they begins to accept crypto as payment. Check back often for further updates.
What Are Crypto Futures Liquidations?
Crypto futures liquidations are how crypto assets are transformed into cash. However, this is an action that should happen as least as possible when it comes to crypto futures.
The amount of leverage in a crypto futures trade will decide how fast or slow that liquidation can occur.
If the crypto investment dips too below the margin of the leveraged position whereas it would kill an account balance, this is an example of a forced liquidation. The trader would have to put more funds into the account to prevent a forced liquidation. Otherwise, after a certain period of no funds in the account, forced liquidation will occur.
Why Do Crypto Futures Liquidations Decrease Bitcoin Value?
Traders who decide to leverage their crypto investments combined with the overall volatility of the market can be a big reason for decreased Bitcoin value. Leveraging means petitioning for a loan so that the crypto trade can return to its original position to prevent liquidation which is closure of the crypto trade account.
What Other Cryptocurrencies Experienced Liquidations Besides Bitcoin?
Of the $153.3 million in liquidations, about $47.51 million was for Bitcoin, hence why the crypto took such a big hit in value in just one day. Bitcoin made up 33% of the overall liquidations that occurred.
Keeping crypto accounts open enhances overall value, so account closures from the liquidations are harming Bitcoin and other cryptocurrency’s values.
Ethereum saw $22.71 million of these crypto futures liquidations. Other lesser-traded cryptocurrencies experienced $19.28 million in liquidations. Many in this category had less than $5 million in liquidations. For example, LTC had $4.96 million in liquidations while BCH and XRP had $4.32 million and $4.17 million respectively in liquidations.
How To Prevent Crypto Futures Liquidations
When making a crypto trade, doing stop-loss orders is the most popular way to prevent crypto futures liquidations. If the crypto reaches a specific price, then it will be automatically traded to prevent the trader from losing too much initial investment.
Conclusion
Analyze the crypto market accordingly to have a set trade plan in place to reassure you make more profits than experiencing losses.