Things you should know about crypto
Leverage can turn a normal Bitcoin move into a massive liquidation cascade.
This week Bitcoin jumped from around $69K toward $79K and more than $4B in short positions were liquidated as traders were forced out.
Then Bitcoin dropped back below $76K and another $100M in long positions were wiped out.
The lesson
Price moves can force traders to buy or sell whether they want to or not.
That forced buying and selling can make the original move much bigger.
Before using leverage check how much room your position actually has.
A small move in Bitcoin can become a very expensive one when leverage gets crowded.
Leverage can turn a normal Bitcoin move into a massive liquidation cascade.
This week Bitcoin jumped from around $69K toward $79K and more than $4B in short positions were liquidated as traders were forced out.
Then Bitcoin dropped back below $76K and another $100M in long positions were wiped out.
The lesson
Price moves can force traders to buy or sell whether they want to or not.
That forced buying and selling can make the original move much bigger.
Before using leverage check how much room your position actually has.
A small move in Bitcoin can become a very expensive one when leverage gets crowded.
