More than $ 1.6 billion in Bitcoin long positions were liquidated yesterday as a result of a broader fall in the cryptocurrency market, data from the market tool Bybt show. This marks one of the biggest settlement days of all time.
These losses occur when traders borrow excess capital from exchanges to place larger bets on their positions. They can go “bought”, to bet on the high prices of an asset, or “sold”, to bet on falling prices. As capital is lent, exchanges automatically close these positions when prices reach a predetermined level and trading is considered “settled”.
Billions of dollars were lost that way yesterday. Bitcoin traders were probably betting higher, but (as the market has changed) prices have reached their settlement levels and resulted in huge losses.
The data shows that most settlements took place at Binance, with more than $ 600 million in long positions being closed. Huobi was next in line with $ 400 million in sales, while OKEx came in third with $ 248 million in sales.
The largest individual settlement occurred in a Bitcoin deal in Huobi with a value of $ 20 million.
Bitfinex recorded the lowest number of settlements on its stock exchange, with only $ 1.2 million in capital lost – a metric that suggests that its traders were using low leverage or had sufficient capital to avoid settlements compared to other exchanges.
Those who sold Bitcoin short had some losses as well. The data shows that more than $ 210 million in Bitcoin sales were settled yesterday – Binance once again led with $ 92 million in settlement of short positions – while traders rushed to bet against the prices of highly leveraged assets and were caught in volatility.
The losses from Bitcoin settlements were only part of the $ 4.4 billion carnage yesterday. In the broader cryptocurrency markets, $ 3.64 billion and $ 342 million in long and short positions were settled, respectively. Of that total, Binance alone saw more than $ 1.7 billion in liquidations, with 538,000 traders affected.
Meanwhile, the market continues to fall. Bitcoin fell 13% the previous day and is trading at $ 48,600 this Tuesday morning. However, compared to last month, it still increased by 50%. The cryptocurrency is traded at R $ 280 thousand in Brazil.