Bitcoin (BTC) skyrocketed to $24,700, with a gain of more than 11% over the past 24 hours. Tuesday This marked a three-week high and recovered all losses from the weekend.
The sharp surge of the crypto asset may come as a surprise to traders who had been expecting prices to drop following the closure of two crypto-friendly banks last week and the depegging of USD Coin (USDC), a major stablecoin.
On December 31, 2018, $100 million of bitcoin shorts (or bets against a price increase) were liquidated. This Monday, the liquidated amount reached its highest since January 14: a bitcoin surge led to the liquidation of $500 million worth of cryptocurrency futures.
Data from Coinglass shows that 78% of all bitcoin futures traders suffered losses. Binance, OKX, Huobi and Bybit were the exchanges that caused the largest amount of liquidations.
Liquidation is when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when the trader cannot meet the margin requirements for a leveraged situation (fails to have sufficient funds).
Massive liquidations may indicate the top or bottom of a rapid price movement, allowing traders to adjust their positions accordingly.
As the US bank stocks plummeted on Monday, bitcoin prices rose. This data reveals that the price action was driven by spot trading. Despite bitcoin’s recovery, the open interest in futures never reached what it was on March 9, when the cryptocurrency was priced above $23,500. This implies that investors were purchasing BTC, instead of futures.
Binance also made an announcement on Monday that it would convert $1 billion of its native binance USD (BUSD) stablecoin to bitcoin, ether (ETH), bnb coin (BNB) and other tokens, which may have had a hand in the price rise.
Meanwhile, following US market movements, the Asia Dow dropped 2.2%, Japan’s Nikkei 225 fell 2.5%, and the Hang Seng shed nearly 1%.