After the liquidation of cryptocurrency contracts, the lost money mainly flows into the following aspects:

Counterparties

In cryptocurrency contract trading, there are both long and short parties. When one party is liquidated, the other may profit. For example, if Investor A goes long on a Bitcoin contract and Investor B goes short, if the price of Bitcoin falls and leads to A's liquidation, then the portion lost by A may become part of B's profit.

Platforms and Market Makers

Transaction Fees: Cryptocurrency trading platforms charge a fee for each contract transaction, and this is no exception during liquidation. Platforms charge a certain percentage of the transaction amount as a fee, which is deducted from the trader's funds, regardless of whether the trade is profitable or liquidated.

Risk Reserve: Some platforms set up a risk reserve, and after a liquidation, the platform may take a portion of the funds from the risk reserve to cover potential risk gaps. Part of the source of the risk reserve comes from the accumulation of trading fees and other income.

Market Maker Profits: Market makers provide liquidity to the market and profit from the bid-ask spread. When liquidation occurs, market makers may profit through reasonable buying and selling operations amid price fluctuations.

Market Absorption

The cryptocurrency market is highly volatile; liquidations can lead to a large number of contracts being forcibly closed, triggering further market price movements. The funds of the liquidated parties are absorbed by the market during rapid fluctuations, becoming part of the market price changes. For instance, a large number of long liquidations can exacerbate price declines, causing more asset values to shrink. This reduction in value can be seen as one destination for the liquidated funds.

Summary:

Everyone should try to trade mainstream coins and avoid altcoins, as almost all altcoins can have prices manipulated by market makers or rogue traders. Trading contracts with them is essentially betting against them, equivalent to the liquidated funds being reasonably and legally obtained by the manipulators.

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