Friday, the 10th of December, 2021 expiration date of Bitcoins Liquidation option; US$300 Million loss expected to Bitcoin economy.
Bitcoin futures contracts have also taken a serious hit in light of the plunge in the value of Bitcoin seen earlier this week. On December 4, 2021, the value of Bitcoin plummeted to US$42,000 from a peak price of US$57,000. This then wiped off 26% of the value of the most famous cryptocurrency in the world.
Resultantly, future contracts for Bitcoin have also faced serious damage, being reduced by as much as US$ 850 Million from the liquidation proceeds. It is speculated that the burden of low liquidation proceedings had a huge effect on the “Fear and Greed Index”. If the impact is inflicted then it would drive a plunge in the index and cause it to reduce to its lowest since July 2021. Future contracts for Bitcoin are scheduled to come to an end on Friday, 10th December 2021.
The expiry of futures contracts is estimated to result in a liquidation loss of US$300 Million. In some good news, however, the loss has been constrained somewhat. This is because of a rebound in the value of Bitcoin as it went upwards of US$42,000. This loss would have been compounded if the value of Bitcoin had remained stagnant at US$42,000.
As per experts, the situation at present is different from the scene back in July, when Bitcoin’s value had fallen to US$30,000. That low would have meant an entire wipeout of Bitcoin gains for the year. However, at present, and at the current rate, a US$42,000 low means a 44% gain still being held for the year. Exchanges Bitcoin reserves have also seen a gradual tumble, reaching figures last seen in 2018. Investors and Traders are resultantly very reluctant in getting rid of any or all of their Bitcoins. They may be aware of the fact that exchanges currently only hold 2.27 million Bitcoins as their reserves have been shrinking lately.
On Friday, the date of expiry, the real loss to the liquidation will entirely depend upon the valuation of Bitcoin come 8:00 am UTC on December 10. If Bitcoin is valued between US$ 47,000 to 50,000 at the time, the liquidation loss will be around US$ 300 Million. If this value increases to between US$ 50,000 to 54,000, this would still incur a heavy loss of around US$ 160 Million. If, however, Bitcoin manages to recoup its missing value and climb back to US$54,000 or above, this could see the liquidation loss slashed to US$30 Million. Thus greatly cushioning the loss expected to incur.
More or less, the viewpoint of experts suggests that the loss would be more than US$ 300. The only thing that can curtail the chances of loss is massive Bitcoin investment.