Bitcoin (BTC)’s early Friday drop, triggered by concerns about crypto-friendly bank Silvergate (SI), shook off the futures market’s bullish leverage.
Exchanges liquidated longs of bullish bitcoin futures worth more than $62 million during the Asian hours, the highest amount since August, according to data from Glassnode. Short liquidations worth just over $500,000 were also observed.
Liquidation occurs when the market moves against a trader’s bullish/bearish bet, leaving him with insufficient funds to keep the leveraged trade open.
The dominance of long liquidations shows that leverage was bullish, meaning most traders were positioned for a price rally.
Bitcoin, the leading cryptocurrency by market value, fell more than 5% to $22,000, reaching its lowest level since February 14, data from CoinDesk shows.
Shares in Silvergate fell 50% on Thursday after the crypto-friendly lender said it was evaluating “its ability to continue as an ongoing business” and delayed filing its annual report with the Securities and Exchange Commission.
Bitcoin’s belated response to Silverage news may have stemmed from fears that the crisis at the bank known to facilitate money transfers between exchanges and other market participants could exacerbate the liquidity crisis in the crypto market.
Most exchanges announced a suspension of trading with Silvergate on Thursday.
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