Bitcoin liquidates $500M longs hour

Bitcoin’s hiccup liquidates $500M of longs in one hour

Bitcoin 12% price plunge caused futures traders to lose nearly $500 million within an hour—and more than $2.8 billion over two days

Yesterday’s record Bitcoin price plunge caused a record-setting wave of liquidations on cryptocurrency derivative exchanges.

In total, more than $2.8 billion in bitcoin futures longs—bets that the price of BTC would go up—were liquidated on March 14 and 15, according to exchange data firm Bybt.

That included a record $500 million of bitcoin futures longs liquidated within an hour—an all-time high— according to a March 15 tweet by on-chain analytics firm Glassnode’s founders Jan Happel and Jann Allemann

Bitcoin dropped below $54,000 falling from its new all-time highs of $61,700 early on Tuesday—a correction of about 12.5%. Again, a great deal of that happened quickly, with a decline of more than $6,000 in just six hours setting another all-time record.

The $500 million liquidation record may suggest that many new and inexperienced traders have joined the market. 

Happel and Allemann had another explanation: “There is excess greed in the system, with 60% of contracts levered 20x or more.” 

While the Crypto Fear & Greed Index did rate March 15 as “Extreme Greed” it was actually down fairly substantially—rated 76, versus last week’s 81 and last month’s 95.

Today, it is down to mere “Greed” at 71.

With BTC seeing large-scale mainstream exposure and adoption, many believe that lots of new traders and investors not used to its volatility have joined the market—which has in turn increased volatility.

In a mid-February report, analysts at the world’s top bank JPMorgan Chase & Co. suggested that excessive retail speculative inflows into Bitcoin could result in it making sudden downward movements due to inexperienced traders selling when they see corrections that are minor in Bitcoin terms. Which is one possible good explanation for what happened.

And more inflows—perhaps from new investors—is coming. According to a March 15 report, a study conducted by Japanese investment bank Mizuho Securities suggests that nearly $40 billion of the $380 billion in direct stimulus checks the U.S. is about to send out to all citizens may become an addition to Bitcoin’s market cap. A representative of the bank said that according to its calculations “it could add as much as 2-3% to Bitcoin’s current $1.1 trillion market value.”

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.