Bitcoin (BTC)’s slide early Friday, sparked by concerns about crypto-friendly bank Silvergate (SI), shrugged off bullish leverage from the futures market.
According to data from Glassnode, exchanges liquidated over $62 million worth of longs, or bullish bitcoin futures, during the Asian hours, the most since August. Short liquidations worth just over $500,000 have also been observed.
Liquidation occurs when the market moves against a trader’s bullish/bearish bet, leaving them with insufficient funds to keep the leveraged trade open.
The dominance of long liquidations shows that leverage was skewed on the bullish side, meaning most traders were positioned for a price rally.
Bitcoin, the leading cryptocurrency by market value, fell over 5% to $22,000, its lowest level since Feb. 14, data from CoinDesk shows.
Silvergate’s shares fell 50% on Thursday after the crypto-friendly lender said it was evaluating “its ability to continue as a company” and delayed filing its annual report with the Securities and Exchange Commission.
Bitcoin’s late reaction to the Silverage news may have stemmed from fears that the crisis at the bank, known for facilitating money transfers between exchanges and other market participants, could worsen the liquidity crisis in the crypto market.
Most exchanges announced a suspension of Silvergate-related business on Thursday.
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