More than $ 2.7 billion in futures contracts have been signed in the past 24 hours, according to This resulted in a significant drop in the price of Bitcoin (BTC) in a short time from $ 41,000 to $ 32,600.

Why is Bitcoin falling?
In the futures market, liquidation of positions occurs due to the fact that traders take additional capital to trade larger positions.

For example, exchanges in the bitcoin futures market typically offer up to 100x influence. This allows traders to borrow 100 times the initial capital to trade bitcoin.

The downside to using it is that when the bitcoin price drops slightly, it can lead to the position being closed or devalued.

For example, suppose a trader uses 10x leverage and borrows 10x equity to buy Bitcoin for $ 40,000. If the price drops 10% to $ 36,000, the position will be closed.

When a long position is closed, it is sold to the market. Consequently, if a large part of the market is looking for bitcoins and long-term agreements start to be made, it creates huge selling pressure.

On January 11, the bitcoin market experienced strong sustained pressure due to large sell orders on Coinbase. When whales or wealthy investors were sold out, many long-term contracts were terminated within hours.

Successive liquidations resulted in a domino effect that resulted in a sharp sell and a 16% correction.

However, in an optimistic sign, the correction ended at around $ 32,700, which whale charting analysts described as a community of whales.

A group of whales is formed when whales buy bitcoins of a certain level and do not move it. Often this level becomes a support zone because whales are likely to double their contribution if there is a significant drop and the price of BTC falls back to that level.

what happened after that?
Despite the fact that bitcoin has dropped significantly, the overall market sentiment regarding BTC remains generally bullish.

As reported by Cointelegraph, Bison Trails protocol specialist Elias Seamus suggested that the number of whales actually increased after bitcoin experienced a sharp drop in prices.

The trend shows that the whales have already gathered with a series of windings, which is positive. Seamus wrote:

“Headlines in excess of $ 1,000 BTC continue to grow at the expense of everyone else, even as the recent downturn begins. Selling, the whales ate bitcoins. ”
Analysts at Glassnode, a chain-related analyst firm, explained that Bitcoin’s fundamentals have remained intact despite the downturn. They emphasized that the hash rate of the Bitcoin network and mining problems are still at a very high level. Analysts noted:

“Despite the fact that the value of bitcoin in US dollars has dropped today, the fundamentals of the chain are still strong, which indicates the health of the network. # Bitcoin mining problems and hash rate in ATH. ”
While the current 15% -25% is the biggest pullback of this bullish cycle so far, it’s worth noting that there were several 30% corrections during the Bitcoin bull run in 2017.

As Cointelegraph previously reported, the current decline in bitcoin price coincides with the formation of a potential bottom for the dollar strength index.

Source: CoinTelegraph