Expectations for Even Further Bitcoin Gains Keep Lid on Futures Contracts Liquidations
Only $133 million in futures were liquidated on BitMEX as bitcoin soared above $11,400.
Jul 28, 2020 at 3:13 p.m. UTCUpdated Mar 2, 2023 at 10:34 p.m. UTC
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Liquidated bitcoin futures contracts stay at relatively low levels despite the bellwether cryptocurrency’s daily gain of more than 10% Monday as some traders expect higher price movements.
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- Breaking above $10,500 was a critical bullish market signal for many traders since bitcoin had stayed below that price since September 2019.
- Monday’s liquidations are less than half the amount of contracts closed by liquidation on May 10, when bitcoin briefly dropped 15% to $8,100 from a daily open of $9,500.
- Significant bitcoin price movements generally trigger the liquidation of hundreds of millions in futures contracts by reaching pockets of market liquidity that has accumulated over time or are traded with excessive leverage.
- “Everyone knows this is going up,” said Zoran Scekic, managing partner at cryptocurrency trading firm Zorax Capital, adding that he doesn’t think retail traders are in over-leveraged short positions at this point, which could be the reason behind relatively low levels of liquidated futures contracts.
- Scekic expects an “abundance of liquidations” at the first moderate price correction, however, given the market's sentiment shift to bullishness.
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