369,100 investors lose everything as crypto market dips by over $200 billion

369,100 investors lose everything as crypto market dips by over $200 billion

As bitcoin prices plunged below $43,000, $3.5 billion in liquidation took place, dropping the market value from $2.3 trillion to $2.1 trillion at the time of writing.

A total of 369,103 traders liquidated their accounts for the day. The biggest liquidation order happened on Huobi-BTC.

What is liquidation?

Investors leveraged positions are liquidated if an exchange closes them for a partial or total loss of their initial margin when on cryptocurrency markets.

A trader who is incapable of meeting the margin requirements for a leveraged position (doesn’t have the funds to keep the position open) will be forced to liquidate the trade. Liquidation occurs both in margin and futures markets.

In the case of a large move against a leveraged position, you can lose the entire collateral (initial margin) you paid. Some countries, such as the United Kingdom, consider crypto trading such a risk that they have prohibited crypto exchanges from offering leveraged products to retail investors in order to protect them from losses.

Bitcoin’s 16% plunge in the wake of its official recognition as legal tender in El Salvador had fueled bullish sentiment as the United States was coming off of Labor Day holiday weekend.

Ether, Cardano, XRP, Dogecoin, and other tokens were also affected by the downdraft, with daily losses reaching nearly 20% before some form of price stabilization was achieved.

With financial markets risk-off, the crypto market was under pressure that grew as the day progressed.

There were 1.1 billion dollars in Bitcoin liquidations after the sell-off, however, the most recent activity suggests that exchanges have returned to a buying mode, and on-chain data does not indicate investors are rushing to close their positions.

Bitcoin’s dominance rate is 42.1%, and the total market capitalization of all cryptocurrency is now $2.103 trillion.

Although its rollout was hampered by technical problems with the official digital wallet, El Salvador’s use of Bitcoin – a major test of its real-world utility – later appeared to have been resolved. The nation holds 550 bitcoins, said President Nayib Bukele on Twitter.

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