The price of bitcoin fell by more than $1,500 within several hours on Sept. 24 — fast, even by crypto-market standards — causing most major crypto assets such as Ethereum and EOS to drop by nearly 20 percent.
Several hours after the drop to $8,000, the bitcoin price recovered relatively quickly to $8,700. Crypto trader Don Alt, a technical analyst, said he expects a further pullback.
More than $650 million in BTC was liquidated on BitMEX, the most widely used BTC margin trading platform. Based in Seychelles, BitMEX provides customers with 100x leverage — essentially loans to traders that multiply the size of an investment by 100 times. BitMEX is headed by CEO Arthur Hayes.
The margin calls were made by data platform Datamish, Bitcoinist reported.
Liquidation happens on margin trading platforms like BitMEX when traders lose their entire positions that are leveraged, often causing a domino effect with other positions becoming liquidated as well, according to CryptocurrencyNews.
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On Sept. 24, when the bitcoin price dropped by more than 15 percent against the U.S. dollar, leveraged long contracts on BitMEX started to become liquidated, causing a cascade of additional liquidations.
Coindesk describes a long squeeze as a situation where investors who hold long positions feel the need to sell into a falling market to cut their losses. This pressure to sell usually leads to a further decline in market prices.
The drop in the bitcoin price happened days after the launch of Bakkt, a bitcoin futures market operated by Intercontinental Exchange Inc. (ICE), the parent company of the New York Stock Exchange.
Twenty-four-hour volumes on Sept. 23 hit 270,000 BTC ($2.6 billion) while Bakkt’s was 71 BTC ($690,000).
Commentators had suggested the Bakkt launch would move Bitcoin markets significantly, Bitcoinist reported. The price drop “flies in the face of Bakkt’s recent futures launch, which was supposed to be a bullish catalyst but has so far fallen short of expectations,” according to Coindesk.
The huge gap in activity is a boon for BitMEX and cryptocurrency industry in general, VanEck digital asset director Gabor Gurbacs suggested on social media.
Hayes, the CEO of BitMEX, predicts the bitcoin price will reach $100,000 in the next three years, according to CCN.
“In any case, BTC’s 2019 bull market hangs on a thread,” Brad Keoun reported for Coindesk.
