The cryptocurrency market witnessed $106 million in liquidations over the past 24 hours, highlighting the risks of leveraged trading. This liquidation wave primarily impacted long positions, as Bitcoin (BTC) and Ethereum (ETH) saw sharp price corrections.
Why Did Liquidations Happen?
Several factors contributed to this event:
High Leverage: Many traders used excessive leverage, making them vulnerable to small price fluctuations.
Market Volatility: Sudden price drops triggered a chain reaction of forced liquidations.
Whale Movements: Large investors selling assets can accelerate price declines, leading to margin calls.
Impact on the Market
Increased Volatility: Liquidations create panic selling, causing further price swings.
Reduced Market Confidence: Frequent liquidations can make investors hesitant to trade.
Buying Opportunities: Lower prices may attract long-term investors.
How to Avoid Liquidation
Use low leverage (2x-5x) instead of 50x or 100x.
Set stop-loss orders to protect against sudden drops.
Maintain extra margin to withstand market fluctuations.
With the crypto market's unpredictable nature, risk management is key to avoiding costly liquidations. Stay updated and trade wisely!