The digital asset market is currently witnessing a substantial downtrend, causing huge losses to traders. Today, according to data reported by Lookonchain, a trader who held long positions on several tokens lost millions of dollars.
The trader took long positions
As per Lookonchain data, the whale leveraged long positions on crypto futures including Bitcoin, Solana, and other tokens in the Hyperliquid trading platform.
However, things did not go as expected as the whale lost $9.85 million trading the tokens. Due to increased market volatility, prices continued declining, and as a result, liquidated his entries.
Crypto futures are derivatives contracts that allow investors to borrow assets from trading platforms and bet on the future price of specific cryptocurrencies. They bet with the expectation that prices of the assets will surge or drop in the future. In a long position, like in this case above, the investor anticipated the asset price to rise. In a short position, traders expect prices to fall.
In cryptocurrency trading, liquidation occurs when a trading platform forcefully shuts down a position because of a total or partial loss of an investor’s margin amount. In the case above, the trader lost a total of $9.85 million on his account on long positions in Bitcoin, Solana, and other tokens.
After the market declined, the trader tried to counter his long liquidations by opening a margin short. He deposited another $3.5 million USDC into Hyperliquid as a margin short, hoping to ride on the emerging momentum.
Liquidations in the market
Losses and profits are part of the cryptocurrency market. According to data from Coinglass, multiple assets owned by 68,966 traders were liquidated today, with total liquidations amounting to $156.68 million in the past 24 hours. This highlights that investors are constantly losing big funds.
Leverage enables investors to borrow capital from trading platforms, allowing them to trade bigger than they normally do. Although this can amplify profit, it comes with high risks of massive losses.
Crypto assets are volatile financial instruments. While their extreme price fluctuations unlock opportunities for investors seeking to profit from long or short positions, they also expose them to potentially huge losses.
