The digital asset market witnessed a significant drop in Bitcoin over the past 24 hours from $45,000 to around $40,000, leading to the liquidation of over $660 million, according to Change machine.
This drop highlighted the margin used for open positions in futures contracts. It is worth noting that the margin on native coins like Bitcoin, rather than USD or stablecoin, has decreased. Conversely, cash margins, which are used by platforms like CME for futures trading, have been trending upward, marking a difference from more retail-focused platforms like Binance, which primarily use more volatile crypto margins.
Since January 2, there has been a remarkable increase in cash margin from 275,000 Bitcoin equivalent to 295,000, which has now been reset due to the liquidation event. This reflects the total amount of open margined futures contracts in USD or USD-pegged stablecoins such as USDT and BUSD.
Despite the recent price drop, there is a slight resurgence in crypto margining, which needs to be observed closely to know the potential implications.
Additionally, the estimated leverage ratio, a critical measure of futures open interest relative to the exchange’s balance, fell to a new low of 0.17, indicating a cleansing of the effect of leverage in the system.
Bitcoin’s Plunge to $40,000 Triggers Massive Liquidations Amid Shifting Margin Trends appeared first on CryptoSlate.