11 Jan 2021
An extreme $1.8 billion worth of leveraged positions got liquidated during the Monday crash
There are clearly a lot of leveraged traders in the market at the moment, taking hefty risk to squeeze more profits out of the bull market in bitcoin. This has led to record daily liquidation levels.
So far in January, we’ve seen three days with the value of the total daily liquidations being above $900m in the bitcoin market.Contrasting this to the period from September to December, it’s evident that leveraged exposure has picked up, as the period saw only one day with total daily liquidations above $900m.This is clearly a sign that the risk appetite in the market has increasing.The tendency have been that long traders have seen more liquidations than short traders, likely due to a higher risk appetite from bulls, applying more leverage to their trades than the bears.Sunday to Monday saw a new daily long liquidation level of more than $1.5 billion, as bitcoin made a sharp correction with a $7,500 daily candle.Applying 10x leverage or more around ATH levels is a high-risk bet, and one should be prepared to get liquidated if one does not use tools such as stop-loss to manage the risk.In this environment, one should consider the risks before partaking in leveraged trades both one and two times. For sure it’s nice to see large multiples on your returns if bitcoin climbs further, but is it truly worth the risk of getting liquidated?