Bitcoin broke the $100,000 mark for the first time, but the sharp rise in prices also led to liquidations of 210,000 investors within a day, causing a mix of joy and sorrow in the market.
On Thursday, December 5th, the cryptocurrency Bitcoin surged by 6.1% to $103,800.45 per coin, breaking the unprecedented $100,000 milestone. Other cryptocurrencies also saw a continuous rise, with Ethereum up by 2.6% to $3,945.863. Cryptocurrency exchanges like Coinbase, retail trading platform Robinhood, and cryptocurrency mining company Marathon also experienced significant gains in the early trading session in the U.S. stock market.
Market analysts attribute this surge to the nomination of Paul Atkins, a risk consultancy executive at Patomak Global Partners, as the chairman of the U.S. Securities and Exchange Commission (SEC) by President Trump on Wednesday.
If confirmed by the Senate, Atkins could potentially lead the SEC to adopt a more lenient policy towards cryptocurrencies. However, the drastic price fluctuations in the cryptocurrency market have left some investors happy while others worry.
According to Coinglass data, as of 5:40 PM Eastern Time on Thursday, more than 210,000 individuals were liquidated in the cryptocurrency market within the past 24 hours, with a total liquidation value of $1.08 billion. Of this amount, long positions were liquidated at $810 million, while short positions were liquidated at $269 million.
Liquidation in the virtual currency market occurs when investors engage in leveraged cryptocurrency trading, and the market movement goes against their expectations, leading to their accounts not being able to maintain open positions. To mitigate further losses, trading platforms automatically force liquidation by selling or buying back the investor’s position.
In such scenarios, investors not only lose all of their margin but may also incur losses exceeding their initial investment due to the sharp fluctuations in market prices. In cryptocurrency trading, given the extreme price volatility and high leverage multiples, liquidation is a common and highly risky phenomenon.