💡 The Truth About Liquidations and Crypto Price
Many traders think that when longs get liquidated, it “helps the market” or boosts the price. The reality is more nuanced.
A long is not actual ownership of the coin — it’s a contract with the exchange speculating on price. When that long is liquidated:
No real coins are bought or sold; the underlying supply doesn’t change.
The “loss” goes straight to the exchange, either through liquidation fees, funding, or insurance funds.
The market often sees forced selling, which can push price down in the short term.
In essence, liquidations don’t add value to the coin. They are a transfer of contracts and fees, not actual market growth.
Real price movement comes from genuine demand and supply — when people actually buy or sell the coin itself, not just a leveraged contract.
So next time you see a liquidation cascade, remember: it shakes accounts, not the intrinsic value of your HODL.
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