According to data, with BTC plummeting to $29300 today, the clearing limit of the cryptocurrency market is approximately $236 million.

The cryptocurrency futures trading market has cleared approximately $236 million in the past 24 hours

When the chips of the holders of stock index futures contracts are unsuccessful, the price moves towards a loss direction, precisely consuming a certain proportion of the collateral (original collateral), causing the derivatives exchange to forcibly close or "liquidate" trading positions, "liquidation" also occurs.

One factor that significantly increases the risk of contract liquidation is the level of leverage chosen by investors. The "leverage ratio ratio" here refers to the loan limit, which is usually many times of the original trading position itself.

Although leverage represents an increase in all profits obtained by the holder, what is equally true is that all damage caused will be increased to the same level.

In the cryptocurrency market, clearing in the short term is not uncommon. The significant main reason behind this is that most of the assets in this industry sometimes exhibit very strong changes.

However, there is another factor at play, which is that extreme leverage can be easily obtained in the market. Many websites are likely to easily distribute leverage amounts up to 50 or even 100 times their original trading positions.

Such a high leverage ratio, together with the common uncertainty of the currency, means that buying and selling without knowing it will be very risky in the market, which is why large and medium-sized clearing events often occur.

Now, the following is a table from CoinGlass that displays the clearing statistics of the cryptocurrency futures trading market that occurred in the past day.

As you can see above, over $236 million in cryptocurrency stock index futures contracts have been liquidated in the past 24 hours. Overall, this sharp increase in leverage involves the liquidation of more than 72500 trader.

The vast majority of settlements occurred within the past 12 hours, which is not unreasonable, as most of the uncertain prices of Bitcoin and other assets today arise during this period.

Many small details of CoinGlass also show that the vast majority of previous day's settlements (approximately 88%) involved long-term contracts. The underlying reason is that large-scale liquidation events are mostly triggered by market crashes.

Interestingly, the clearing limit of the Ethereum futures trading market ($56 million) is higher than that of the Bitcoin futures market ($46 million). This may be because ETH's 24-hour decline (6%) is higher than BTC's decline (3.5%).

A large-scale liquidation like this is also known as "extrusion molding". In extrusion molding, fierce price fluctuations can cause many contracts to be liquidated, but this can only further drive price fluctuations. This type of expanded price volatility will naturally lead to more liquidation, so in this way, liquidation can cascade together like a waterfall.

BTC Price

At the time of writing this article, the transaction price of Bitcoin was approximately $29300, which fell by 3% last week.