BitMEX - Brutal forced liquidation - How price is drop so fast!

[Lucius]

While reading the forum comments, a good number of members claim that it was not part of a panic sale, but that they used this sharp decline as an opportunity for investment. Therefore, many are wondering how such a dramatic decline came to about 50% at one time, and of course everyone blames COVID-19, which is true, because all the world markets collapsed in time WHO is declared world pandemic.

But where did it really start when it comes to crypto? The answer lies in BitMEX, where we witnessed the brutal forced liquidation of as much as $702 million in just 15 minutes, and most traders were not even aware of what was happening. Similar things have happened a lot of times, but this time additional oil on fire was the fact that something is happening on global level, and all markets are related and react in a similar way.

The top cryptocurrency by market capitalization fell from $7,200 to a 10-month low of $5,678 in just 15 minutes at around 10:45 UTC, catching most traders off guard and forcing liquidations worth $702 million on BitMEX.

A sell liquidation on BitMEX occurs when the market moves adversely against a long position (a bullish bet) and breaches the liquidation price – a predetermined limit. When that happens, the liquidation engine closes down the long position automatically.

While both long and short positions have been liquidated, more than 90 percent of the liquidations are of long positions. It indicates the leverage was heavily skewed to the bullish side.

A sudden price drop almost always results in a long squeeze, which in turn adds to the downward pressure around the cryptocurrency, leading to an exaggerated price drop.

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[cryptoaddictchie]

This also explained aside from the Covid 19 crisis The truth about the falling price of bitcoin what do you think?

This event happened on bitmex is clearly a shady and an act of deception. I am not fond of using their platform but it seems they show that they can pulled out funds from the market in just a matter of time.

EDIT: 15 minutes of locked down can already make the market bleed just like that. Crypto isnt gonna be safe from liquidation if they want really to completely shut it down. $702million as profits. Bitmex, should donate to victim of covid19.

[buwaytress]

It doesn't even really need a crash of this scale to see it often on these types of platforms offering leveraged trading. For 100x leverage (of yes, it gets crazy like that), you could have 1% of your bankroll put in and if you don't set up margins and stops properly, you'll get wiped out before you can even understand what's happening. Funny people still fall for it.

Now I heard even all these so-called DeFi platforms had to roll up their business, and even the big boys are discussing if their algo's suited for this crash.

You loan on margin, trade on margin, it's all gonna go bad if you don't understand precisely how much you're risking.

[coolcoinz]

Bitmex just one big casino and they have too many power. I think, that they planned recent drop

They did because their CEO tweeted that BTC is going to fall to 6k, at the time when we were at 8k. He knew how many long positions there are and what impact will it have on his own exchange, thus his 6k prediction, but he underestimated the panic on other exchanges this move will cause. His exchange made the 6k happen, other panic sellers took it down to 4k as a follow up. We can clearly see that second wave on the charts happening a few hours after the first one.

There's a good side to all of it. The crash was largely due to leveraged position being liquidated, not because the holders lost their nerve and sold their holdings. What used to be held last year is still held and exchanges are operating on fake volume and virtual position based on fake money made out of thin air (USDt).

[JeromeTash]

Honestly the emergency of more of these derivative platforms and their increase popularity are probably one of the reasons there was a sharp decline earlier this week.
The liquidation of long positions and triggering of stop losses caused a chain reaction in the market which made some traders to panic sell too. All this led to a continuous sharp downtrend.

[Arcas]

Become emergency for many investor keep holding their investment with bitcoin or altcoin, now have move their investment way to USDT look stable and going up. Few day only USD look fantastic with going to the higher price and left all bitcoin and altcoin price.

[fabiorem]

Bitfinex got under governmental scrutiny several times during the bull market of 2017 (due to the tether FUD, where tether was supposedly being printed to boost bitcoin price - a good thing, but the cucks freaked out over it), whereas with Bitmex nobody says a word about it. Its very easy to think that Bitmex is, in fact, a operation from TPTB to undermine bitcoin by inside. That's why it is left alone by governments.

In a site of forex traders Bitmex is called a fraudulent exchange, with several complaints about it. Some people report having their positions liquidated without any reason, and their money stolen. The fact that the exchange is registered in the Seychelles could make more difficulty to investigate it, but Bitfinex was also registered overseas, and still it was investigated.

When CME started trading bitcoin futures contracts, they implemented breaks for both short and long positions, to avoid intense manipulation. Such breaks do not exist with Bitmex. Bitcoin didnt go to zero because Bitmex had a hardware malfunction. That's why we are sitting at 5k and not at 10 dollars. The break was a random event!

Now, you can lie to yourself and to the world and believe it was the coronacircus all along, but bitcoin is much more resilient than stock markets. In fact, many people have run to bitcoin to get rid of the derivative's threat in case of such massive crashes. But then, now its right there on our faces. And while gold dropped 10% from its previous highs, bitcoin dropped 60%.

[malevolent]

The effectiveness of trading breaks is debatable, it's easy to abuse them which hinders price discovery and can lead to further panic. If Bitmex was an op ran by TPTB  they wouldn't have bothered banning users from the US, China, NK, Sudan, etc. from using their service.

[yazher]

We need to move on we cannot do something about it anymore, from now on we need to learn this lesson. That's how brutal the crypto market is, since the start of this Epidemic, things are not looking good in the crypto market anymore. Almost all of the industries are crashing one after another and that's what droves BitMEX to forced the liquidation. Today, they announce the first trial of the vaccine of the Corona Virus in the USA, Let's hope that the trial will be successful for the market to recover again soon.

[PrimeNumber7]

BitMEX does not use trading prices on its platform to make liquidation decisions. BitMEX uses an index price derived from multiple, reputable exchanges to decide to liquidate a trader. This is not to say that traders will not take advantage of arbitrage opportunities if the price on BitMEX is lower than the price on other exchanges.

[Lizzylove1]

I want to really understand this Bitmex debacle, is it that traders use instrument available on their platform to quickly liquidate their position? or they have a common trade agent advisers who agree to short their position or some sort of troll room to signal sell off and buy in other to take profit and blame it on something?

[Kakmakr]

It is a typical trade bot domino affect, where you see a slight drop in the price and the trading bots are triggered to protect the investments. Once they are in motion it triggers the next one and the next one as the price drop even further. <Depending on how each trade bot was configured and at what threshold> 

Bots do not ask questions, it just react on the way it was configured. A whale can cause this domino affect with a rather small amount of coins on different exchanges, because the threshold for most bots are not configured for large margins. 

[figmentofmyass]

Bitfinex got under governmental scrutiny several times during the bull market of 2017 (due to the tether FUD, where tether was supposedly being printed to boost bitcoin price - a good thing, but the cucks freaked out over it), whereas with Bitmex nobody says a word about it.

the CFTC opened a probe into bitmex last year: U.S. Regulator Probing Crypto Exchange BitMEX Over Client Trades

for all we know, the DOJ is involved by now and they plan to unseal an indictment next year. the feds take years to build these cases.

When CME started trading bitcoin futures contracts, they implemented breaks for both short and long positions, to avoid intense manipulation. Such breaks do not exist with Bitmex. Bitcoin didnt go to zero because Bitmex had a hardware malfunction. That's why we are sitting at 5k and not at 10 dollars. The break was a random event!

people are giving bitmex too much power. they weren't solely responsible for the drop (or the reversal) and there's no way they could bring the price to $10.

Now, you can lie to yourself and to the world and believe it was the coronacircus all along, but bitcoin is much more resilient than stock markets.

why would you think that? bitcoin has way less market depth. it's easy to pump and dump. and to hear you tell it, the market is completely controlled by bitmex.

[hermawan9416]

Will Bitmex go bankrupt after this? Or will they still be able to solve these problems

[secondbtc]

Exchange with Highest volume can easily manipulate price
By filling purchase order of btc with low price creating panic in market.

so i agree bitmex is behind this manupulation.

[borya2002]

Exchange with Highest volume can easily manipulate price
By filling purchase order of btc with low price creating panic in market.

so i agree bitmex is behind this manupulation.

BitMEX definitely accelerated the fall

[Broly46]

Holy cow, DOW get dumped for a whopping 3000 index point, I think it will have a strong impact on the future generations, they would likely gonna suffer greater depression than previous generation. It’s not bode well.