As illustrated by the recent liquidation of over $750 million in cryptocurrencies within 24 hours as Bitcoin hit a new all-time high, the cryptocurrency market is very volatile. Liquidation occurs when a trader loses the necessary margin and has to change their position to cash. While leverage helps many traders to boost profits, this also can cause significant losses if the market goes against them, therefore causing forced liquidations.
Many traders were drawn to Bitcoin's growth, but its volatility causes unexpected price declines that could set off panic and cascade liquidations. This condition impacts the whole market, including altcoins, not just leveraged traders. This occasion generally underlines the hazards involved in leveraged trading and the necessity of cautious risk management as the market changes.#bitcoin