Bitcoin Price Falls to Two-Month Low – Have Professional Traders Benefited?
A considerable number of traders liquidated when the price of BTC fell to $25,300, but was it mostly retail traders who were eliminated?
Market analysis Join us on social networks
The price of Bitcoin fell 11.5% between August 16 and 18, leading to the liquidation of $900 million in long positions and sending the price to its lowest level in two months . Prior to the decline, many traders were expecting a breakout in volatility that would push the price higher, but that was obviously not the case. With large liquidations, it is important to determine whether professional traders took advantage of the price drop.
Bitcoin just experienced one of its largest daily volume selloffs in history.
As of 4:30 p.m. yesterday, #Bitcoin fell 7.5% in 20 MINUTES, wiping out $42 billion in market capitalization.
This mass liquidation event involved more exits in 1 day than during the FTX collapse in November… pic.twitter.com/KmVNkXoOLw
— The Kobeissi Letter (@KobeissiLetter) August 18, 2023
There is a common belief among cryptocurrency traders that whales and market makers have an advantage in predicting large price moves and this allows them to gain an upper hand over retail traders. This notion contains some truth, as advanced quantitative trading software and strategically positioned servers come into play. However, this does not protect professional traders from significant financial losses when the market becomes unstable.
For large and professional traders, the majority of their positions can be fully hedged. Comparing these positions with previous trading days provides an estimate of whether recent moves anticipated a broad-based correction in the cryptocurrency market.
Long margins at Bitfinex and OKX were relatively high
Margin trading allows investors to amplify their positions by borrowing stablecoins and using the funds to acquire more cryptocurrency. Conversely, traders who borrow Bitcoin (
A considerable number of traders liquidated when the price of BTC fell to $25,300, but was it mostly retail traders who were eliminated?
Market analysis Join us on social networks
The price of Bitcoin fell 11.5% between August 16 and 18, leading to the liquidation of $900 million in long positions and sending the price to its lowest level in two months . Prior to the decline, many traders were expecting a breakout in volatility that would push the price higher, but that was obviously not the case. With large liquidations, it is important to determine whether professional traders took advantage of the price drop.
Bitcoin just experienced one of its largest daily volume selloffs in history.
As of 4:30 p.m. yesterday, #Bitcoin fell 7.5% in 20 MINUTES, wiping out $42 billion in market capitalization.
This mass liquidation event involved more exits in 1 day than during the FTX collapse in November… pic.twitter.com/KmVNkXoOLw
— The Kobeissi Letter (@KobeissiLetter) August 18, 2023
There is a common belief among cryptocurrency traders that whales and market makers have an advantage in predicting large price moves and this allows them to gain an upper hand over retail traders. This notion contains some truth, as advanced quantitative trading software and strategically positioned servers come into play. However, this does not protect professional traders from significant financial losses when the market becomes unstable.
For large and professional traders, the majority of their positions can be fully hedged. Comparing these positions with previous trading days provides an estimate of whether recent moves anticipated a broad-based correction in the cryptocurrency market.
Long margins at Bitfinex and OKX were relatively high
Margin trading allows investors to amplify their positions by borrowing stablecoins and using the funds to acquire more cryptocurrency. Conversely, traders who borrow Bitcoin (
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