Crypto crisis: 57,000 traders lose money as bitcoin drops to $26,000 amid weak liquidity

Bitcoin has fallen to $26,000 today, Friday, May 12, 2023, causing thousands of traders to get liquidated with great losses.

The volume of trade of Bitcoin stood at approximately $18.2 billion, a 12.6% decline in the last 24 hours. The market cap of the cryptocurrency market locks around $1.09 trillion, representing a 3.75% fall in the last 24 hours.

Most of the traders who faced liquidations during the past 24 hours had opened positions on derivatives swap contracts, also known as perpetual contracts, Coinglass reports.

Over 57,000 traders were liquidated and the total amount of liquidations stands at $143.28 million with the largest single liquidation order being a BTC-USDT-SWAP contract on OKX at valued at $2.61 million.

However, this lack of a physical delivery date can lure traders into holding their short-term positions overnight, which can quickly turn into high-risk swing trade positions that are vulnerable to sudden price movements.

The biggest factor of risk comes for those traders that don't apply proper risk management techniques such as stop losses or isolated margin accounts. Isolated margin accounts limit the use of margin capital to a single position, which can prevent a sudden price movement from wiping out the entire account.

In contrast, crossed-margin accounts give one single position access to all the account's margin, putting the entire account at risk of liquidation in the event of a sudden price move.

With the decline in value of the cryptocurrency market, Nigerian dealers are yet to give up on the digital currency, as they continue to tip Bitcoin to recover in 2023, according to a Legit.ng report.

Bitcoin's tumultuous journey amid market liquidity and regulatory backlashes

In recent times, Bitcoin, the poster child of the crypto world, has witnessed a tumultuous journey as it hit a two-month low amidst weak market liquidity and regulatory attacks. The fate of the digital currency has become a subject of intense debate, with investors and analysts closely monitoring its every move.

As market liquidity took a nosedive, Bitcoin's value plummeted, leaving investors in a state of panic. The bearish sentiment was further fueled by regulatory attacks from various jurisdictions, including China, which recently banned financial institutions from offering crypto-related services. The move triggered a mass sell-off, with Bitcoin losing a whopping 30% of its value within a few days.

The uncertainty surrounding the regulatory landscape has further deepened the crisis, with investors grappling with the question of whether to stay invested or cut their losses. The crackdown on crypto mining in China has forced many miners to look for alternative locations, disrupting the market further.

As the world of crypto continues to evolve, the future of Bitcoin remains uncertain. While some believe that the digital currency has the potential to bounce back, others are more pessimistic, citing its volatile nature and the increasing regulatory pressure. Only time will tell which side of the debate proves to be right, but one thing is certain- the world of crypto is never short of surprises.