The price of bitcoin briefly fell below $30,000 from nearly $34,000 within a couple of hours, as derivatives positions worth more than a billion-dollar get force liquidated by crypto exchanges.
About $1.1 billion worth of open interest was liquidated by crypto exchanges in the last one hour, according to tracker Bybt.com. In other words, exchanges liquidated traders' overleveraged positions.
Traders overleverage, or trade on margin, thinking that bitcoin's price would go up and they would benefit more. But when bitcoin's price goes below the liquidation price of their positions, exchanges force liquidate or close their positions because traders are unable to fulfill margin requirements of their leveraged positions.
Of all the liquidations, most of it occurred on Binance, followed by Huobi and OKEx. While in terms of crypto assets, bitcoin positions formed most of the liquidations, followed by ether (ETH) and litecoin (LTC). Source: Bybt.com
At the time of writing, bitcoin is trading down at around $30,200 and ether down at about $960, according to TradingView.