Margin Calls and Contract Liquidations on Seychelles-based Exchange, BitMEX, Result in a Huge Bitcoin Price Drop

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Bitcoin prices have been falling rapidly from a high of $10, 200 to below $8, 311 at some point, which has been attributed to margin calls and liquidations on BitMEX.

BitMEX, a Seychelles-based exchange, provides customers with 100x leverage. These are loans that multiply trader investments by a factor of 100x.

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According to recent data, the situation has seen investors sell into a falling market to cut losses rather than hold long positions. The pressure to sell has led to a further market price decline. 

 

This is the lowest Bitcoin has been since early June 2019. The ferocious sell-off on BitMEX has resulted in a nearly 13% price drop which saw more than 600M long contracts liquidated on the exchange.

As a result, the crypto index is now at one of its lowest, positioned at level 15, which signifies extreme fear.

During a 2-hour sell-0ff period, BitMEX saw volumes worth $2.5B, one of the biggest trading days in months on the exchange. The two-hour window saw almost 6 percent of all long liquidations to date this year occur during this time.

The current price drop has been a concern for years where leveraged derivates exchanges like BitMEX can collapse Bitcoin’s price. This has in turn inspired non-leveraged initiatives like Bakkt’s futures product.

 

 

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