Sotto, a Korean trader, lost nearly $1 million trading Bitcoin futures, reports on March 15 indicate.
Trader On A Losing Spree Trading Bitcoin
On his crypto futures trading account, Sotto first tried to short Bitcoin at around $21,000. However, because of the heightened market volatility and various fundamental factors, prices continued increasing, liquidating his entry.
Observers note that the trader was live streaming his positions when the market turned against him. People monitoring Sotto’s trades said he proceeded to open another short position after being liquidated and got liquidated again.
KOREAN STREAMER SATTO LIQUIDATED FOR NEARLY $1M US DOLLARS SHORTING BITCOIN ON LIVESTREAM🚨🚨 pic.twitter.com/BKLt6KHU99
— ChimpZoo 🇸🇦 (@ThinkingBitmex) March 14, 2023
Crypto futures are derivatives products where the trader borrows the asset from the exchange in anticipation that the asset will rise or fall. In a “long” position, the trader expects token prices to fall. Meanwhile, a “short” position means the trader anticipates prices to tank.
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In crypto trading, liquidation happens when the exchange forcefully closes a position due to a partial or total loss of the trader’s margin amount.
To counter this series of short liquidations, the trader tried fading the market by opening a margin long. By buying on leverage, he hoped to ride the emerging trend. However, the market turned against him, forcing another long liquidation. Like before, Sotto chased the market and got liquidated once more.
KOREAN STREAMER SATTO DOWN $500k SHORTING BITCOIN
HIS LIQUIDATION SITS AT $25.1k pic.twitter.com/AvY37gRdf8
— ChimpZoo 🇸🇦 (@ThinkingBitmex) March 13, 2023
In the end, the trader had racked in nearly $1 million in losses.
Risks Of Leverage Trading, Millions Of BTC Positions Liquidated
This is not the first time Sotto has been liquidated, losing big sums. According to people who commented on a screen grab shared on Twitter, Sotto appears to be constantly on the losing side. The trader, fans who follow him say, likes live streaming crypto futures orders, often doing it at high leverage.
Leverage allows clients to borrow funds from the broker, enabling them to trade bigger order sizes than they ordinarily do. While it can magnify profits, it is a double-edged sword. Losses can be just as high, increasing the chances of being margin called.
In April 2022, Sotto lost nearly $10 million after opening Bitcoin “long” positions. At that time, the coin was trading at around $41,000. The trader placed a “long” entry with a 25X leverage, buying 240 BTC, which, at that time, was worth approximately $10 million. Sotto ended up losing his long position and got liquidated as BTC prices continued falling.
Bitcoin and cryptocurrencies are volatile assets. Their volatility may open up opportunities for traders looking to profit from short or long positions, but also opens up traders to potentially massive losses.
Bitcoin Price On March 15| Source: BTCUSDT On Binance, TradingViewIn November 2021, the coin surged to as high as $69,000 before collapsing throughout 2022, reaching as low as $15,300.
Although prices have since recovered, the volatility of Bitcoin is a risk that traders constantly watch out for. According to Coinglass data, $140.82 million of long and short positions were liquidated in the past 24 hours.