Bitcoin liquidations for short & long positions in future contracts
What are Bitcoin Liquidations?
The sum liquidated volume (USD Value) from short and long positions in futures contracts. Liquidation simply means selling assets for cash. Forced liquidation refers to an involuntary conversion of crypto assets into cash or cash equivalents, this occurs when a trader fails to meet the margin requirement set for a leveraged position.
The terms “long” and “short” simply refer to what type of trade an investor is making. Short trades are bets against price rises, and so short liquidations refer to liquidations that happen on these types of trades. Long trades are those that expect price levels to rise, and long liquidations are those that occur on such trades.
The exchanges that make up the data are Binance, BitMEX, Bybit, Deribit, Huobi, OKEx and Bitfinex.
How to use Bitcoin Liquidations for Trading
After a large short or long liquidation cascade, price tends to see a short term reversion to the mean.