Bitcoin recently experienced a significant spike in liquidations, reaching approximately $130 million following a price surge above $29,000.
Liquidations on the cryptocurrency market occur when traders’ positions are closed, usually as a result of margin calls or stop-loss orders being triggered. A high volume of liquidations might lead to increased volatility, as large numbers of positions are closed and assets are sold off. This can create a domino effect, causing further liquidations and exacerbating price movements.
At the time of writing, Bitcoin is trading at $28,613, having gained around 7% in value over the last 48 hours. Despite this increase, the digital asset has not yet reached its local high of $29,346 reached back on March 24. The market is closely monitoring Bitcoin’s price performance, as breaking through the local high could potentially signal a more extended bullish run.
Interestingly, funding rates on centralized exchanges remain relatively low. This suggests that the current rally may not be fueled by leverage, which could be both a positive and negative factor for Bitcoin’s price movement.
On the one hand, a rally that is not driven by leveraged positions can be considered more stable, as it reduces the risk of a cascade of liquidations due to margin calls. In this scenario, the market may be able to sustain its growth without facing a sharp downturn caused by leveraged traders being forced to close their positions.
On the other hand, low funding rates might also imply that there is a lack of confidence among traders, with many choosing not to leverage their positions in anticipation of a potential price reversal. This could hinder Bitcoin’s ability to maintain its upward momentum, as traders remain cautious and unwilling to take on additional risk.
Sourced from u.today.
Written by Arman Shirinyan on 2031-10-21 09:38:07.
