Bitcoin price temporarily fell from $10,000 to around $9,800, forcing a $57.8 million liquidation of BTC longs at BitMex.
BitMex is a cryptocurrency derivatives trading platform, the largest in the world and popular amongst BTC traders.
BitMex’s Open Interest is over $1.5 Billion
This comes when the number of open interest, the number of open contracts of Bitcoin Futures, exceeded $1 billion, soaring to over $1.5 billion, subsequently pushing the number of the total open interest across major crypto exchanges to over $4 billion according to statistics.
Bitcoin bulls are raving, even “cocky,” as one observer says. At spot rates, BTC has retreated after breaking above $10,000 much to the excitement of traders.
$10,000 is a psychological level, an important resistance level. For trend continuation, it is imperative that prices close above this mark preferably at the back of high trading volumes.
The temporary retracement in the past hour, therefore, seem to dash bulls’ hope, and the high number of liquidations, in their millions, hints at how many buyers had staked their position, expecting higher prices ahead of an event-full 2020.
$53 million of Bitcoin Longs Liquidated
The $57.8 million worth of BTC liquidated, assuming a 25X leverage, then around $2.2 million worth of BTC was in the real sense liquidated. BitMex allows leverage of up-to 100X, and the higher the leverage, the more profits are amplified.
On the flip side, it only takes a small price movement for a shake out to occur.
Here, a $300 dip resulted in a $57.8 million liquidation and a substantial increase in the BitMex Insurance fund.
It is estimated that the fund grew 62% in 2019 highlighting the number of shakes out and forced liquidation that took place in the year.
The BitMex Insurance Fund
The Bitmex Insurance fund was put in place to avoid “auto-deleveraging of traders’ positions and used to aggress unfilled positions before they are filled.”
As per BitMex, the fund “grows from liquidations able to be executed in the market at a price better than the bankruptcy price of that position.”
By the time of going to press, it had 34,125.3274 XBT in balance.
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Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies and enjoys the opportunity to help educate bitcoin enthusiasts through his writing insights and coin price chart analysis. Follow him at @dalmas_ngetich