A recent report by analytics firm Alphractal provides important insights into the risks of margin trading in cryptocurrency markets, highlighting significant liquidations among traders.
Overview of Liquidations
According to Alphractal, 94% of traders have been liquidated in the past three months. Many investors are unaware of the critical areas where mass liquidations are happening.
Situation with Bitcoin and Ethereum
The report states that both long and short positions in Bitcoin with low and medium leverage were completely liquidated in the last 30 days. Similarly, positions in Ethereum were heavily liquidated last month. On the 22nd, a significant liquidity pool at $4,840 propelled prices up quickly, but subsequent accumulation of long positions led to a sharp pullback.
Key Levels to Monitor
Alphractal notes that over the past three months, heavy long positions have been accumulated in the $104,000-$107,000 range for Bitcoin. This is considered a potential liquidation area where market makers might use these levels to push prices higher and trigger stop-loss orders, subsequently creating selling pressure. However, this is not a hard and fast rule, just a critical area to watch closely.
Thus, Alphractal's analytical report emphasizes the need for increased awareness among traders regarding the risks of margin trading and key levels that may act as liquidation zones.
