Price drop to 27,000 US dollars costs long traders

Bitcoin: Price drop to 27,000 US dollars costs long traders on Binance 190 million US dollars

Traders with too much leverage become victims of volatility again. 190 million US dollars liquidated in minutes.

Bitcoin’s (BTC) plunge to US$27,700 and rebound seconds later was a shock to some and financial ruin to others, data shows.

According to on-chain analytics website Glassnode, futures traders with long positions by Profit Revolution lost a total of US$190m on Binance alone in just one hour – more than ever before.

One exchange, 60 minutes, 190 million US dollars

These numbers underscore the current behaviour of Bitcoin, which is circling new all-time highs and, along with Ether (ETH), is considered the hottest asset of 2021.

Long positions had seen almost unbridled growth throughout most of December and into the New Year. The upward movement hardly encountered any resistance.

Despite warnings from various analysts that the bull market could not last forever, many traders took a high risk and bet on further new highs. In this case, 34,800 US dollars was a definite top. Within 24 hours, the BTC/USD pair subsequently fell back to 7,000 US dollars. Within one hour, it even fell by 4,000 US dollars.

The result for those who were over-leveraged was clear to see.

“US$190,000,000 (in long positions) liquidated on #Binance in 10 minutes. Biggest value yet,” as Glassnode commented on a chart showing Binance liquidations.

Risk versus reward

As Cointelegraph reported, short positions were liquidated en masse last week as Bitcoin broke through the $30,000 level for the first time. As a result, short sellers on all exchanges lost a combined $100m.

“Get used to declines around US$5,000 as we get into the US$100,000. That comes with the territory,” Samson Mow the head of strategy at bitcoin technology firm Blockstream summarised on Twitter.

Meanwhile, trading in derivatives linked to bitcoin and ether continue to be extremely popular. CME Group, one of the pioneers in bitcoin futures, will launch ether futures in the first quarter of this year.