The crypto spot market has witnessed a significant drop in Bitcoin price in the last couple of days, which might have been triggered by the liquidation of over $150 million in crypto on derivatives exchange BitMEX.
Per crypto market analytics provider Skew, traders on BitMEX took long and short positions, resulting in the liquidations of $150 million in Bitcoin on February 26. This figure is the highest since the beginning of this year.
$150mln+ liquidations on BitMEX today – highest in 2020 pic.twitter.com/WO7aKyNhcI
— skew (@skewdotcom) February 26, 2020
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Bitcoin’s value surged significantly this year, which surpassed the prominent $10,000 mark to touch almost $10,400. However, the price in the spot market slumped below $8,800, losing around six percent for the last couple of days.
“It has been a very tough week for all asset classes, digital and non-digital,” Marcus Swanepoel, CEO Luno, said. “Overnight and this morning we have seen further significant losses for Bitcoin, Ethereum and Bitcoin Cash. BTC is now down below US$9,000 trading at US$8,778; ETH is below US$250 at US$222 and BCH is under US$325 at US$322.”
Skew’s data also showed that were also $6.1 million worth long orders on BitMEX, a dwarf figure compared to the amount shorted.
Markets factors contributing to the volatility
The recent price surge of Bitcoin is seen as an adjustment for the upcoming halving of mining rewards. Many are also considering the impact of Coronavirus on the recent volatility on the crypto market.
“We do not subscribe to the theory that this proves that cryptocurrencies are not safe haven assets – we have always said that they were not!” Swanepoel added. “But this was an offset strategy based on BTCs ability to add significant value very quickly. With all markets going down sharply investors may look at digital currencies again when we start seeing upsides, as these could rebound quicker than other assets.”