Bitcoin (BTC)’s recent price correction has seen the digital asset drop 5% week-on-week, falling below the $110,000 level. This has affected the prices of cryptocurrencies and has also affected the derivatives market.
This setback has triggered a wave of total liquidations, with Reached $490 million on futures exchangescovering leveraged positions in Bitcoin and other digital assets.
You can observe these liquidation movements in the graph provided by the CoinGlass platform below. All cryptocurrency operations are considered here, not just Bitcoin.
Liquidation occurs when the price of a digital asset moves dramatically relative to a leveraged trader’s position, exceeding the available collateral margin.
According to the mechanism described in CriptoNoticias Cryptopedia, the exchange automatically closes these positions, whether long or short, to protect operators from negative balances.
This phenomenon not only causes heavy losses to operators, but also acts as a catalyst that makes the price decline even more severe.
Fire sales caused by liquidations suddenly increase supply to the market, adding downward pressure. This further exacerbates the initial decline in the asset.
The Bitcoin market is currently navigating a period of uncertainty due to global geopolitical and macroeconomic factors. However, expectations are high for the next US Federal Reserve Board meeting scheduled for October 29th.
Expectations are high that the Fed may announce a rate cut. A downward revision would lower credit costs, a move that has historically encouraged capital flows into financial markets.
Background to more expansionary monetary policy This is usually reflected in a boost to assets that are considered “risky” such as Bitcoin.This could counter the current bearish trend and signal a change in direction for the digital currency.
(Tag translation) Bitcoin (BTC)
