Data shows the crypto futures market has seen liquidations of about $354 million during the last 24 hours as Bitcoin has displayed wild volatility.
Crypto Futures Market Has Observed Mass Liquidations During Past Day
The “liquidation” of a crypto futures contract happens when the exchange forcibly closes the position due to the holder accumulating losses equal to a specific percentage of the margin (the initial collateral).
A factor that can significantly raise the risk of a contract being liquidated is the “leverage,” which is a loan amount that an investor may choose to take against the margin, and it’s often many times the size of the initial position itself.
The obvious benefit of leverage is that if the bet works out and the price moves in the profit direction, the gains made would be more by the same magnitude as the leverage. However, there is a clear downside to it as well; any losses incurred by the investor…
