Retail traders become 'sitting ducks' as sell-off triggers $1.4B liquidation

Retail traders become 'sitting ducks' as sell-off triggers $1.4B liquidation


After flirting with a $2 trillion market cap for the last couple of days, the cryptocurrency market took a 7% hit on April 7, dropping the total crypto market cap to $1.8 trillion. As the unexpected sell-off took place, investors scrambled to find a reason to explain the move.

Analysts typically identify the use of excessive leverage as the prime suspect as this usually occurs as the market reaches an all-time high and traders get greedy, but this is an easy conclusion to reach.

The actual cause could be near impossible to determine. Still, a starting place is looking at how high buyers’ leverage was compared to the previous weeks. Analysts must also question whether a $1 billion liquidation is even significant in the current bullish environment.

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Leverage amplifies price movements on both sidesTotal cryptocurrency market capitalization. Source: TradingView

The negative price swing on April 7 resembles the rally that took place two days earlier. However, retail traders deploy leverage by using

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