CRYPTO NEWS

Crypto Liquidations Hit Almost $300M As Carnage Continues

The carnage in the crypto market has continued today, leading to nearly $300 million in liquidations in the futures sector.

Crypto Futures Market Observes Almost $300M In Liquidations

In case anyone is unaware what a “liquidation” is, it’s best to get a brief look at the workings of derivatives trading.

When an investor opens a crypto futures contract, they have to first put forth some initial collateral, called the margin.

Against this margin, the holder can choose to opt for “leverage,” which is a loan often many times the initial position.

The advantage of leverage is that if the price of the crypto (which the contract is for) moves in the direction the investor bet on, then the profits are multitudes more than just the initial position’s gain alone.

However, the converse also holds true, if the price happens to move in the opposite direction, then losses are also magnified by the same amount as the leverage.

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When a specific part of the initial margin is eaten up by these losses, the exchange forcefully closes the position. This is what a liquidation is.

Now, here is the data related to the futures liquidations in the crypto market over the past day:

Crypto Liquidations

Looks like a large amount was liquidated in the market during the last 24 hours | Source: CoinGlass

As you can see in the above table, around $287 million in the crypto futures market was flushed over the past 24 hours.

Out of this, about $241 million worth of liquidations occurred in the last twelve hours alone. The past four hours also saw sizeable liquidations at almost $64 million.

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The leverage flush over the last day involved nearly 80k futures positions, with 71% of them belonging to long traders.

This fact makes sense as a majority of the liquidations were triggered by the crypto market observing further carnage today.

Such large liquidations aren’t uncommon in the market. There are a couple of reasons behind this; the first is that most of the coins are highly volatile.

The other reason is that many derivatives exchanges offer options for quite large quantities of leverage, sometimes even 100x the initial position.

The high leverage combined with the volatile nature of crypto can make the futures market a risky zone for uninformed traders.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.1k, down 33% in the last seven days. Over the past month, the crypto has lost 37% in value.

The below chart shows the trend in the price of the coin over the last five days.

Bitcoin Crypto Price Chart

BTC seems to have crashed down below $20k today | Source: BTCUSD on TradingView
Featured image from Quantitatives on Unsplash.com, chart from TradingView.com

Why Rich Dad, Poor Dad Author Will Wait For Bitcoin To Drop To $1,100 Before Buying More

Best-selling author Robert Kiyosaki offered his followers a “Rich dad lesson” on Bitcoin. Via his official Twitter account, the writer made a distinction between “winners” and “losers” in the crypto market. Related Reading | Reports: FTX Targeting BlockFi Purchase At $25M At the time of writing, Bitcoin has lost major support as it broke below $20,000::Listen

Best-selling author Robert Kiyosaki offered his followers a “Rich dad lesson” on Bitcoin. Via his official Twitter account, the writer made a distinction between “winners” and “losers” in the crypto market.

Related Reading | Reports: FTX Targeting BlockFi Purchase At $25M

At the time of writing, Bitcoin has lost major support as it broke below $20,000 and it’s currently trading at $18,900 with a 6% loss in the last 24 hours. The cryptocurrency has lost over 75% of its value since reaching an all-time high at $69,000.

BTC’s price trends to the downside on the 4-hour chart. Source: BTCUSD Tradingview

At those levels, the Rich Dad Poor Dad author was a buyer and seemed more enthusiastic about BTC’s price future appreciation. Now, he has made a 180 degrees shift in his speech publicly bashing those investors which he classified as “losers”.

Kiyosaki’s full message is rather grim, and might be aiming for an impossible level, for Bitcoin to crash all the way down to $1,100:

RICH Dad lesson. “LOSERS quit when they lose.”  Bitcoin losers are quitting some committing suicide.’WINNERs learn from their losses. I am waiting for Bitcoin to “test” $1100. If it recovers I will buy more. If it does not I will wait for losers to “capitulate” quit then buy more.

In the past, Kiyosaki highlighted $20,000 as the “buy the dip” level. The author called the cryptocurrency a hedge against inflation and called the BTC’s price crashing “good news” and predicted a “time to get richer” by increasing his holdings.

The author was bullish on BTC and precious metals, but it’s unclear what has caused him to shift his views. On a different occasion, Kiyosaki foresaw the start of a depression, preceded by a “giant crash” across global markets.

The main trigger for this scenario is the U.S. Federal Reserve (Fed) and its attempts to slow down inflation, which is currently at a 40-year high. At that time, Kiyosaki said:

BIDEEN & FED need inflation to prevent New Depression. Inflation rips off the poor. Inflation makes rich richer. Biden and Fed corrupt. Prepare: Giant crash then new depression. Be smart Buy, gold, silver Bitcoin.

Should You Listen To Robert Kiyosaki?

Kiyosaki was almost right when he predicted Bitcoin would reach an all-time high near $75,000. However, as crypto users pointed out, he has been mostly wrong about his BTC’s price prediction.

As seen below, Kiyosaki has been talking about this doomsday scenario for over a decade. In 2017, he tweeted about a potential crash in the real estate market, this prediction proceeded a major bull run in the sector.

Kiyosaki’s market predictions across the past decade compared to the S&P 500. Source: Fintwit via Twitter

Related Reading | TA: Bitcoin is Plunging, But It’s Too Early to Say Bulls Have Given Up

Therefore, it seems wise to take his words with a grain of salt. The crypto market seems soft and susceptible to macro-conditions, but for BTC to return to the $1,000 levels seems unlikely.

Crypto Liquidations Hit Almost $300M As Carnage Continues

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