The price of bitcoin has fallen below $54,000 from nearly $58,500 on Sunday as derivatives positions worth more than $1 billion get force liquidated by crypto exchanges.
About $1.50 billion worth of open interest was liquidated by crypto exchanges in the last 24 hours, according to tracker Bybt.com. In other words, crypto 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 cannot fulfill margin requirements of their leveraged positions.
"In the past weeks, a lot of accumulation on the long side happened, so traders should expect such correction events," Bitfinex CTO Paolo Ardoino told The Block, adding that such corrections are "normal."
Most of the liquidations occurred on Binance, followed by Huobi and Bybit. While in terms of crypto assets, bitcoin positions formed most liquidations, followed by ether (ETH) and XRP.
Bitcoin is currently trading at around $53,400, according to tracker TradingView. Meanwhile, ETH is trading at about $1,775.