After an incredible run-up to nearly $42,000, Bitcoin (BTC) price finally entered a significant correction, and at the time of writing the price is down by about 18%. While the swift drop to $30,402 may not induce sleepless nights from the HODLer crowd, large drops like the one seen over the past 24-hours can easily blow up a leveraged trader’s portfolio. The sharp downside move also threatens to wipe out a large portion of the gains accrued over the past few weeks.
Data from Bybt indicates that over $2.7 billion worth of futures contracts has been squared off in the past 24 hours.
Once traders in long positions start getting liquidated due to margin calls, traders who have been waiting to buy withhold their purchases as they expect an even better opportunity to buy at a bargain. This lack of demand and excess supply trigger steep falls like the one seen today.
Daily cryptocurrency market performance. Source: Coin360