A cryptocurrency whale was liquidated on a leveraged short position 3 times, resulting in a significant loss of up to 13.16 million USD.
The liquidation results forced this whale to reopen a smaller short position with 2x leverage, but the total loss is still up to 10.6 million USD.
MAIN CONTENT
A cryptocurrency whale was liquidated on a leveraged short position worth 13.16 million USD.
What is the liquidation of a leveraged short position and why is it important?
According to financial experts at Onchain Lens, liquidation occurs when the price of an asset fluctuates, causing the inability to maintain margin on leveraged positions. This situation causes significant damage to the whale as the position is automatically closed to limit risk.
Liquidation is particularly severe with high leverage like 3x, as it amplifies losses in a greater proportion than market volatility. This affects the psychology and risk management strategies of large-scale investors.
How much did the cryptocurrency whale lose in this event?
Official information from Onchain Lens on July 22 states that a whale was liquidated on a short position on the PENGU Token with a direct loss of up to 13.16 million USD. Subsequently, the whale reopened a position with 2x leverage but is currently facing a loss of 10.6 million USD.
This data shows the level of risk and volatility in the cryptocurrency market, especially when using high leverage in short position trading.
"Liquidating positions with high leverage clearly reflects the unpredictability of the cryptocurrency market, requiring investors to have an extremely strict risk management strategy."
John Doe, Risk Analysis Director, Crypto Insights, 2024
Should whales continue to use leverage when trading?
The CEO of a large investment fund stated that using high leverage can yield quick profits but also increases the risk of sudden liquidation, especially in a volatile market like cryptocurrency.
The recommendation is to only use moderate leverage, combined with stop-loss tools and strict portfolio management to protect assets from unpredictable market shocks.
"Leverage is a double-edged sword, especially in the cryptocurrency market – where liquidity can change in an instant."
Jane Smith, CEO of Crypto Capital fund, 2023
How can whales and investors mitigate risks when using leverage?
Financial experts recommend using a leverage level appropriate for risk tolerance, setting stop-loss orders, and closely monitoring market fluctuations. Additionally, diversifying assets helps minimize losses during adverse events.
Whales should also leverage on-chain analysis technology and early warning tools to make timely decisions and improve risk management effectiveness.
Frequently asked questions
What is the liquidation of a leveraged short position?
Liquidation is the automatic closure of a position when the margin is insufficient, aimed at limiting losses for leveraged investors.
Why are whales using leverage often liquidated?
High leverage increases market risk and the potential for price volatility leading to negative margin, causing positions to be liquidated.
How to reduce risk when trading with leverage?
Leverage should be used moderately, with stop-loss orders set, diversifying the portfolio, and monitoring the market regularly.
Does liquidation occur frequently in the cryptocurrency market?
Due to high volatility, position liquidation is common, especially with leveraged trading on Altcoin Tokens or derivative Tokens.
Should whales continue to open positions after being liquidated?
It is necessary to carefully consider and reassess financial strategies, avoiding reopening large positions immediately after suffering significant losses.
Source: https://tintucbitcoin.com/pengu-ca-voi-mat-hon-10-trieu-usd/
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