$850 Million Liquidated as Bitcoin, Ethereum Dip

Key Takeaways

  • More than $210 billion was shaved off the entire cryptocurrency market capitalization today.
  • The flash crash resulted in over $850 million worth of liquidations.
  • The funding rates across all derivative trading platforms point to a steeper correction.

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The cryptocurrency market has taken a steep nosedive after posting steady gains throughout October. Although some lower cap assets have rebounded, traders appear to be overleveraged, leading to another downswing. 

Crypto Market Suffers Crash

Volatility remains rampant in the cryptocurrency market despite the beginning of a new uptrend. 

Roughly $210 billion has been wiped from the entire cryptocurrency market capitalization in the last few hours. The sudden flash crash resulted in more than $850 million worth of long and short positions liquidated across the leading crypto derivatives trading platforms. 

Bitcoin, Ethereum, and most other lower cap assets were affected by the downswing. 

Crypto market heat map
Source: Coin360

Only a handful coins are up today. Aave, 1inch, and Mask Network surged in tandem shortly after Korean exchange Upbit announced it would list their tokens. Likewise, Shiba Inu has been posting higher highs on rumors that Robinhood will add it to its crypto-related offerings.  

Red Flags Appear

Although it appears that the correction could be over, there are a few signals that point to a deeper correction. The estimated leverage ratio across crypto derivatives exchanges is about to hit a yearly high. 

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Favorable funding rates of 0.1% or higher every eight hours are generally considered unsustainable. Higher rates suggest that market speculators are more optimistic as long traders pay short traders’ funding. When this happens, traders can begin to feel so-called “euphoria” in their positions, which often leads to steep corrections.

Data from CrytoQuant reveals that Bitcoin’s estimated leverage ratio across all exchanges is hovering around 0.19%, a negative signal for the continuation of the uptrend. 

crypto exchange leverage ratio
Source: CryptoQuant

Funding rates across all derivatives trading platforms may need to normalize for the cryptocurrency market to maintain a healthy bull run. Although a rally could continue without a reset of the funding rates, the market could see a similar event to today’s flash crash. 

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Lucky Buyers Possibly Bag $8K Bitcoin During Early Morning Flash Crash

Highly volatile cryptocurrencies like Bitcoin, Ethereum, and other altcoins can behave irrationally at any given moment, especially when turbulence strikes. But what happened this morning on the US branch of Binance, was shocking for even those who have seen flash crashes happen in real time.

The result of a massive wick left on the BTCUSD chart was a violent trip to $8,000 where coins were potentially exchanged for prices that are currently 87% lower than where Bitcoin is trading at right now. Here is a closer look at what went down, and what might have happened as a result.

Flash Crash On Binance US Takes BTC Back To $8,200

If you’ve been in crypto for some time, chances are you’ve heard some horror stories. Other users have lost funds due to hacks, sent funds to the wrong address, or worse. What few ever experience, however, is getting caught up in a flash crash.

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Related Reading | Bitcoin Price Sets New All-Time High Above $65,000

We don’t mean a particular strong selloff, but a “flash crash” that sends the price of an asset diving so deep, it can often bring them back to close to zero.

While this morning Bitcoin price didn’t fall back to nothing, it did get a digit knocked off its price tag, and about 87% of the value per coin, according to the Binance US BTCUSD price chart.

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The wick left behind on Binance US reached August 2020 levels | Source: BTCUSD on TradingView.com

The flash crash took the cost per BTC back to pre-bull market breakout levels from back in August 2020. It also was roughly an 87% fall from current prices, which was a larger drawdown percentage wise than the bear market from $20,000 to $3,200 at the low.

Bloody Bitcoin Wick Leaves Shock And Awe Behind

The hourly chart below is a better demonstration of how ridiculous the wick looked on lower timeframes as it was happening. The wick reached as low as around $8,200.



The hourly chart shows how deadline the wick was | Source: BTCUSD on TradingView.com

Any lucky Binance US users with a limit order ready to go could have gotten filled during the madness, which also means that some poor pleb could have sold their coins at a cost of $8,200 – significantly lower than the current price per Bitcoin, which just yesterday reached a new all-time high.

Related Reading | Bitcoin Price Prepares To Blast Off Back Into RSI “Bull Zone”

In the past, assets like Chainlink and even Ethereum have flash crashed down to nearly zero. Keeping orders ready on an exchange can take advantage of situations like the above. But these rare events aren’t predictable and can strike at any moment.

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com


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President Nayib Bukele Confirms Purchasing 150 BTC Amid Crypto Market Crash

Just within a day after the official day of Bitcoin (BTC) becoming a legal tender in the Central American nation of El Salvador.  the volatile nature of the cryptocurrency ecosystem has revealed its two sides for the first day. First came off with a massive gain in which Bitcoin attained a 7-day high of $52,853.76, a trend truncated with the Bitcoin cryptocurrency flash before crashing to a 24 hour low of $43,285.21.

El Salvador’s President, Nayib Bukele, exhibited the traits of a Bitcoin bull, announcing the country purchased an additional 150 units of the digital currency. This was targeted at shoring up the country’s earlier purchases to kickstart the new Bitcoin era.

From his tweet, Nayib Bukele thanked the International Monetary Fund (IMF) for the dip, noting that the country has yet again “saved a million in printed paper.” The President confirmed that the country now HODL about 550 BTC  in its reserve. The dip has shown El Salvadorans could suffer from the worst of the cryptocurrency world, as the potential for price dips cannot be ruled out in a volatile asset-enabled financial ecosystem. 

The establishment of the Bitcoin Trust Fund by El Salvador revealed the country’s preparedness for events like this. With an initial seed funding of $150 million, the fund was targeted at aiding the easy conversion of received Bitcoin into fiat currency at the point of purchase. The funds, if used, will guard vendors or users against the impacts of the flash crash. 

In today’s digital currency ecosystem, there are numerous Bitcoin holders, but only a few summon the courage to stack up massive units of the digital currency amidst a growing sell-off in the market. Besides El Salvador, a Business intelligence and software firm, MicroStrategy is also known to stack up Bitcoin during market slumps. The latest purchase of 3,907 units of Bitcoin by the Michael Saylor-led firm was made during the past general market correction.

Image source: Shutterstock


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Flash Crash Sends Cardano (ADA) Barreling Downwards To A $2 Retest

Cardano (ADA) has not been left out of the massive flash crash that just occurred throughout the market. What seemed to be a good day for bitcoin as El Salvador’s “Bitcoin Day” began has now turned to nothing short of a nightmarish market opening. The crash saw bitcoin drop $6K in only a matter of hours. While the general altcoin markets have recorded crashes as high as over 20% in the same timeframe.

With altcoins following bitcoin closely, the price of the ADA shows similar movement patterns to BTC following the flash crash. The number 1 crypto coin fell to the mid-$40K, taking the whole of the market down with it.

Related Reading | IOG Denies Rumors About Cardano Smart Contracts Platform

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The flash crash has taken the market by surprise, given that general sentiment is positive and the Fear & Greed Index putting the market in “Extreme Greed”. There’s currently no exact reason pinpointed for this crash. Although massive liquidations to the tune of almost $1 billion across the crypto market look to be the culprit. The liquidated positions being mostly long positions.

Crash Puts Cardano (ADA) In Chokehold

Struggling alongside the other cryptocurrencies is Cardano (ADA). The asset had long left behind the $2 price point since mid-August, with indicators pointing towards a pathway to $5 following upgrades. But with the current flash crash, the digital asset lost over 18% of its value. This set it on a downward trend that saw ADA hitting the low $2s for the first time in three weeks.

Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course

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Even though Cardano (ADA) has seen an upward correction that sent it towards mid-$2, the price is still maintaining a struggling pace. Trend lines in the asset show a sideways zig-zag, up and down pattern. Depicting numerous dips and recoveries in just the past hour alone. Starting the early hours of the morning was ADA at $2.75. A bit shaky but was holding on tight to this price point.

Cardano (ADA) price chart from TradingView.com

Cardano (ADA) price chart from TradingView.com

Flash crash sends ADA price to three-week lows | Source: ADAUSD on TradingView.com

At this junction, it is still too early to tell how much recovery ADA will make in the hours following the flash crash. It has so far recovered about 6% of value lost during the crash, with indicators pointing towards total recovery. As of the current time of writing, Cardano (ADA) is still trading low at a price of $2.45 according to Coinmarketcap, with a 24-hour price change of 13.46%.

Featured image from Currency.com, chart from TradingView.com


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Flash crash rattles gold markets as Bitcoin holds strong

Gold prices have tanked during the Monday morning Asian trading session, compounding losses accumulated over the past week.

On August 9, the price of gold quickly fell to its lowest level since March as a flash crash drove prices below $1,700/oz.

According to Tradingview, the price of the precious yellow metal plunged to $1,690/oz during Asian trading hours on Monday. The price of gold has since posted a minor recovery, last changing hands for $1,742/oz at the time of writing.

Gold is currently down by 4% over the past 7 week and 8.7% since trading above $1,900/oz at the end of May. The precious metal has retreated 8% for 2021 so far, and it is currently down 14.6% from its August 2020 all-time high of just below $2,040.

Forex trader and chart guru, Peter Brandt, attributed the crash to wholesale liquidations, stating: “This has all the finger prints of a bank/brokerage house conducting forced liquidation upon a huge leverage speculator.”

He noted that the leverage ratio on Chicago Mercantile Exchange’s gold markets is roughly 15 to 1, suggesting heavily leveraged traders are driving price action for gold.

Analysts at London trading firm City Index similarly blamed this morning’s crash to “stop-loss related selling in very thin market conditions.”

However, U.S. unemployment figures have also been the catalyst for a decline in commodity prices last week. The unemployment rate dropped more than expected to 5.4% from 5.9%, a new low of the pandemic era according to a Bureau of Labor Statistics report published Friday. With the labor market and economy is broader U.S. economy continuing to heal, City Index concluded:

“The better jobs data sent the US dollar and US bond yields higher, never a good formula for commodities.”

With one BTC currently worth 25 ounces of gold, Bitcoin is down 28.5% from its all-time high against gold — with a single BTC having been worth 35 ounces of gold during Bitcoin’s all-time price high of nearly $65,000 in mid-April. However, one Bitcoin was worth 15.5 ounces of gold at the start of 2021.

BTC price in gold ounces: Highcharts.com

At the time of writing, BTC had slumped 2% over the past 24 hours to trade for $43,667, according to CoinGecko.