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Bitcoin crashed by a lot of figures in just a day. No one knows what happened. However, some analysts have come up with a possible reason for liquidating over-leveraged positions on the futures market. Bitcoin is currently trading at $46,400, an 8.92% drop from yesterday.<\/strong><\/p>\n Based on <\/span>Sam Trabucco’s<\/span> tweet thread, it is not the first time bitcoin futures have influenced the market. It has happened before and might happen again.<\/span><\/p>\n Earlier this year, the top crypto touched a new all-time high above $65,000. In turn, futures also went up, and open interest in all significant contracts shot up.<\/span><\/p>\n In May, Bitcoin plunged to about half the April value and hit $30,000. A significant sell-off was taking place at this point. It was after Tesla announced they would no longer accept bitcoin payments. Concerns came up about the environmental harm that crypto mining causes.<\/span><\/p>\n For some time, the price remained around that level. However, with time, the price recovered to $50k. Notably, the futures were also up at this point then dipped a little.<\/span><\/p>\n From the trend, we can comfortably deduce that when <\/span>futures<\/span> are high, it suggests aggressive buying. According to Crypto VizArt, a CryptoQuant analyst, the buyers open positions when Open Interests go up. However, when numbers go up, it indicates net buying.<\/span><\/p>\n When numbers are going up, it is the opportunity for enthusiasts to buy at higher prices. It is essential to note this because, after that period, the next is characterized by numbers going low. Consequently, some of the aggressive net buyers who bought near the top get liquidated. The process continues because the crash keeps on for a few minutes.<\/span><\/p>\n Last week, there was high premia all across the crypto market. The OIs were also extensive and growing fast. The crypto market was generally rallying. Also, the <\/span>news<\/span> of El Salvador purchasing 400 bitcoins boosted optimism in the crypto market. The optimism saw the most prominent crypto by market cap approach the $53K level.\u00a0<\/span><\/p>\n<\/span>The Futures Market and BTC<\/b><\/span><\/h2>\n
<\/span>Why Bitcoin Futures Matter<\/b><\/span><\/h2>\n
<\/span>Bitcoin Plunges<\/b><\/span><\/h2>\n