Bitcoin (BTC) futures liquidations hit their lowest level since April on Tuesday, according to CoinGlass data. Just under $9 million worth of bitcoin futures were liquidated, making up for a large share of the total $28 million of crypto-tracked liquidations. This is among the lowest levels seen so far this year.
Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This happens when a trader is unable to meet the margin requirements for a leveraged position or fails to have sufficient funds to keep the trade open.
Futures trading volumes dropped 21% compared to Monday, while open interest, or the number of unsettled contracts, rose 1.16%. This suggests that traders opened more positions but used significantly less leverage, indicating a lesser risk-on sentiment.
FxPro senior market analyst Alex Kuptsikevich told journalists in an email that bitcoin could see sideways action in the coming months and, hence, lower futures trading volumes than usual. “The market is experiencing a period of ‘reaccumulation’, which often occurs when halving is imminent,” Kuptsikevich said. “Previous such periods have resulted in several months of sideways trading.”