The price of bitcoin has now rebounded, dragging the larger cryptocurrency market somewhat with it, to trade at around $ 11,300 – but not before more than $ 1 billion in bitcoin and crypto positions were liquidated on various exchanges.
“In the past 24 hours, 72,422 people have been liquidated,” Bitcoin and cryptocurrency market data provider Bybt said via Twitter, adding the largest liquidation order, worth 10 million dollars, which arose on the Seychelles-based exchange Bitmex, known for its highly leveraged trading. volume.
Leverage trading allows traders to take larger positions with smaller amounts of capital, with the number of bitcoin and cryptocurrency exchanges offering high leverage trading explaining in recent years. Traders take positions, in fact bets, on where they expect prices to be when their position “closes” – losing their capital if the market goes against them.
This week’s bitcoin price hike has drawn a wave of retail traders into the crypto market, with many bitcoin exchanges reporting trading levels since the start of the year as eager investors tried to catch up. reprise.
The cause of the bitcoin flash crash was not immediately clear, but some speculated that it could have been caused by so-called “whales” that control large amounts of bitcoin and other rock-busting cryptocurrencies. market. The market is more easily driven by whales when trading volumes are lower, such as early Sunday morning.
“Whales play,” writer and financial commentator Frances Coppola asked via Twitter.
The sudden move in the price of bitcoin, which resulted in the erasure of over $ 20 billion in the combined market capitalization of global cryptocurrencies according to data from CoinMarketCap, was seen with a combination of shock and fear by the bitcoin and cryptocurrency community.
“Bitcoin is the most ruthless asset in the world,” Bitcoin and crypto investor Anthony Pompliano said via Twitter.
« [Bitcoin] hits $ 12,000, then drops $ 1,500 within minutes. Not for the faint of heart. ”
Bitcoin’s rally this week, shattering its nearly three-month trade malaise, was blamed on global investors looking for so-called low-risk safe-haven assets, such as gold – which was on hand for hitting $ 2,000 for the first time this week.
“Bitcoin’s push has been fueled by the search for safe-haven assets,” Micah Erstling, trader at Bitcoin and crypto market maker GSR, said via email.
“Markets are being pulled by current concerns over coronaviruses, as well as trade tensions between the United States and China, which also helps explain the meteoric rise in gold. fulfilling the narrative of becoming an encompassing, risky, safe-haven deflationary asset. ”