As an underregulated industry, cryptocurrency is rife with scams and stories of market manipulation. And this is not just speculation – there’s a lot of dubious activity that goes on in this sphere. In the latest event, $52 million in short positions were liquidated on BitMex on August 25th. However, nothing malicious actually took place.
BitMex offers huge leverage for traders (up to 100x), which enables these sizeable positions. After an increase in the price of bitcoin by 4.8% on an otherwise uneventful trading day, $52 million short positions were liquidated. This is an unusually high number of liquidations for the price increase.
Many have attributed the high degree of liquidation with an overall pessimistic outlook on the market. Many expect the price of Bitcoin to go below $9,000 in the near future. As a result of the short squeeze, the price of many other alternative currencies was forced downward in the latter half of the trading week. In addition to many of the liquidated short positions, multiple long positions were also liquidated following a subsequent price reverse, though not to the same extent. The price of bitcoin managed to stand above the $10,000 mark before dipping on Thursday to $9,500.
In all likelihood, nothing criminal took place on the BitMex exchange. Margin trading involves a serious amount of risk, and the exchange offers huge leverage of 100 times the amount stored. This enables bigger traders to make better trades with economies of scale in a trading context. People with open long and short positions did get obliterated, but this is just what happens in the world of trading. The numbers were big but what happened was nothing out of the ordinary.
Bitcoin has been breaking records in recent times, and it currently dominates the cryptocurrency market with over 68.8% of total market share. According to the data obtained from Coinmetrics, the market capitalization of Bitcoin stands at $100 Billion, which is another record set by the increasingly popular cryptocurrency.
It is currently trading at around $9,500, and is expected to reach highs of $11,000 soon. Most traders are of the opinion that bitcoin is currently at a good price for a long position. In the past two months, it has traded around $10,000 and above and could be set to see a significant appreciation. It is in the perfect buy zone right now for investors. However, it could sink below $9,000 before seeing a reversal.
Other coins have been following suit in terms of a price decrease, as most coins are positively correlated to the price of Bitcoin. Ethereum Classic has been robust in terms of its price, but this has more to do with the upcoming Atlantis hard fork. This means that a new coin will be created, which traders can take advantage of as additional coins will be conferred to users after the fork.