Liquidation Events In Crypto Trading: Analyzing Bitcoin Cash (BCH)

Liquidation events in Crypto Trading -u: A close view of Bitcoin Cash (BCH)

The cryptocurrency market has experienced an increase in liquidity and volatility in recent years, and many investors want to use the price fluctuations. However, this increased trade activity comes with a new layer of liquidation event. In this article, we will enter the world of liquidation events in Crypto Trading, focusing especially on Bitcoin Cash (BCH), one of the most commonly used altcoin.

What are liquidation events?

Liquidation events occur when the price of cryptocurrencies falls below the support level or is highly transplanted, causing it to lose value quickly. As a result, investors can decide to close their positions, achieving losses and potentially launching the liquidation of other merchants. This can lead to a rapid fall in price, as customers are forced to go to the market.

Bitcoin Cash (BCH) – Case Study

In 2017, Bitcoin Cash appeared as a competitor to Bitcoin, wanting to increase its own price potential through a more practical and user design. The price of the coin jumped sharply, reaching the maximum of $ 64,804.71 in July 2017.

However, the cryptocurrency market has since experienced significant volatility, and many investors have lost losses on BCH because prices have fallen. As the price dropped below the support level of about $ 2,400 in February 2020, the liquidation events began to appear, and the price continued to decline.

Causes of liquidation

Several factors contribute to the likelihood of liquidation:

• Too much saturation : When the price of cryptocurrencies is already high, it becomes more difficult for customers to absorb losses, leading to increased sales pressure.

• High influence use

  : Crypto currency with high influence (eg 100x or more) may increase losses when prices decrease quickly.

• Liquidity Questions : Bad liquidity on the market can lead to a lack of shopping and sales activities, increasing the likelihood of liquidation.

Analysis BCH – Case Study

Let’s analyze Bitcoin Cash using historical prices data with Coinmarketcap:

| Date | Price (USD) |

| — | — |

| 01.01.2017 | $ 1,18 |

| 07.07.2017 | 64.804,71 USD |

| 20.02.2020 | 2.400,00 USD |

The price of BCH reached its peak in July 2017 and then collapsed, which led to a significant event of liquidation. The price remained below the support level a few months before the recovery.

Support and Resistance levels

BCH -OV Table Price detects the key levels that investors should be aware of:

* support level : $ 2,400 (current price)

* Resistance level : $ 5,000-6,000 (Historical Peak)

Conclusion

Liquidation events are a natural consequence of the inherent volatility of the cryptocurrency market and increased trade activities. Bitcoin Cash serves as a study study, emphasizing the risks associated with high prices and poor liquid. As investors continue to move in this complex space, understanding the cause of liquidation is crucial for making informed decisions.

To relieve risk, traders can use strategies such as:

* Diversification : Spread investment in multiple crypto currency to reduce exposure to any individual money.

* position size : managing positions based on the market volatility and the use of influence.

* Stopping orders : Set up stopping orders to limit losses in case of liquidation.

They are aware of the liquidation events and understanding of the factors that contribute to them, traders can make informed decisions and reduce risk exposure.

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