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$7.6B in crypto long positions liquidated in 1 hour as Bitcoin plunges to $52k

54 points by awb 6y ago

testing_1_2_3_4 6y ago
What's interesting about this is I could see it coming a few days ago. Funding rates on FTX were super high, so you could see people were getting reckless with leverage leading up to this.
- dkdk8283 6y ago
  FTX?
  - hmate9 6y ago
    Its a crpyto exchange
  - fighterpilot 6y ago
    It's a crypto derivatives exchange serving non US customers.
basicallydan 6y ago
Predictable angry comment about the stupidly large ad on this site for eToro: apparently my thumbs are too fat to close it, when do I get my complimentary dialling wand? So fat in fact that it opens the ad no matter what I do, only to be told that eToro is not even available in my country. So not only do I see a massive ad that makes the article hard to read, I can’t even close it, and it’s for a product I can’t buy. I hate this, and everybody involved in implementing it should be ashamed of themselves.
patentatt 6y ago
What I hate about Bitcoin is that I have absolutely no idea if this is 1) a good dip to buy, or 2) the start of a much bigger crash. Everything I understand about the topic and the world at large tells me it should be #2, but in retrospect it always winds up being #1. Am I passing up free money today? Or am I smart not to gamble in such an obviously rigged game? Will I look back years from now longingly and wish that I had bought, or smugly and glad that I didn’t. I have absolutely no indication one way or the other. Source: played around with crypto a lot 5-6 years ago, got out of it, and could retire today if I had held.
- Avalaxy 6y ago
  Spread your chances. Buy some now, buy some again later when it crashes even further. If it doesnt crash further, at least you profited from the current dip.
  - netrus 6y ago
    You conveniently left out the scenario where it continues to crash, and OP looses money twice by following your recommendation. It's a casino.
    - fighterpilot 6y ago
      I do like an amended version, which is to buy some now and then unconditionally buy some later, also known as dollar cost averaging.
    - LudwigNagasena 6y ago
      Just like any forex market.
  - patentatt 6y ago
    Sure that makes sense, but why? By that I mean, if I'm evaluating stock in a company, or a commodity, I can reason about the investment in terms that I understand, or at least convince myself one way or the other enough to not lose sleep over it even if I lose money. But crypto? I've got nothing. Total shot in the dark. Completely blind. I can make arguments either way, and both seem equally valid, and both based on pretty much no reliable data. Not looking for an answer here, just venting really.
- polote 6y ago
  How is that different from the stock market ? Maybe you have 'more ideas' but that would not prevent you to be wrong. In both case nobody can predict what will happen next
  - fny 6y ago
beforeolives 6y ago
It could be up to 100k in a week, could be down to 20k or anything in between. I honestly have no idea which one is more likely and wouldn't be surprised by any price, high or low. I'm also very skeptical of anyone who claims to know what's happening in the cryptocurrency market and why.
- treeman79 6y ago
  Zero to infinite. Good arguments all around. If governments decide it’s a threat I imagine it’ll go to near zero. Much to my personal shock that doesn’t seem to be happening.
  - kijin 6y ago
    Bitcoin seems to be approaching the realm of "too big to fail." A trillion dollars disappearing overnight could very well precipitate an economic crisis, and no democratically elected government wants to take the blame for that kind of eventuality.
    - raducu 6y ago
      I'm not contradicting you, and I don't think bitcoin will be banned, but the US total stock market capitalization is 49T and 1T capitalization of bitcoin world wide is not an issue. I use those figures to decide on the future price of bitcoin, in case governments actually addopt bitcoin, so a future, very unlikely ~50X increase in bitcoin price is not enough for me to put money into it. I've missed my chance and a very unlikely future 50X increase in price is not worth the risk, imho.
  - raducu 6y ago
    I don't like cryptos for multiple reasons, a lot of which could be fixed in the future. But we're way over the phase where governments would ban it, on the contrary, I think bitcoin is a last resort fix for the immense global debt. My wild theory is after elites load up on bitcoin(and also a lot of ordinary folks) governments would change bitcoin to bitcoin 2.0 and completely crash other forms of fiat currency, wiping the huge fiat currency debts in the process and also shutting up all the people who want anonimity in bitcoin(because they would lose a lot of money otherwise).
unyttigfjelltol 6y ago
Serious question: why does a reduction in hash rate lead to a loss of USD pricing? That's analogous to pricing USD based on the number of lights on at the NY Federal Reserve at 10pm on Tuesday. I recognize hash rate moves these markets, but seriously, why?
- jpalomaki 6y ago
  Value of Bitcoin is a matter of belief. There’s absolutely no way of putting a justified price tag for the coin (at least for now). It can be that people just thought others might think the China news would be bad and therefore decided to sell. In speculative market you are all the time trying to guess what others are thinking.
- dylkil 6y ago
  >why does a reduction in hash rate lead to a loss of USD pricing it doesnt
mstipetic 6y ago
If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy
- iso1631 6y ago
  Said the people laughing at those who bought in at $20k in 2017/18
  - ttul 6y ago
    Said the people laughing at those who bought at the $30 peak in 2012...
    - iso1631 6y ago
      Quite. If you put $1 a day in since the Big Bang Theory Bitcoin episode aired on 7 December 2017, which is a fair date for when it reached the popular conciousness (13.84 million watched that episode in the US), and bought at the open every day, you'd have converted $1220 into $8600.
  - mstipetic 6y ago
    Who gives a shit about a ponzi scheme
h2odragon 6y ago
https://www.zerohedge.com/markets/bitcoin-crashes-much-15-amid-unsubstantiated-report-money-laundering-crackdown https://www.zerohedge.com/markets/bitcoin-crashes-much-15-am... Maybe the hash rate isn't related...
burlesona 6y ago
It’s interesting and a little surprising to me that people selling almost $8 billion in BTC found ready buyers such that the market clearing price only dropped 10%. That’s a lot of money to move, and implies that a lot of other people saw this as a chance to buy a dip.
- tedunangst 6y ago
  I think these were futures contracts?
- Traster 6y ago
  Alternatively it could be as simple as lots of people having a crap execution strategy. I’m sure there are thousands of people who just have orders in the book that got swept and others with simple python scripts that “buy the dip” with no concept of risk or stop loss. The question is whether those people need to get out of their positions in the next few days causing a further drop or whether they can hold in which case the price will stabilise and eventually continue to run up.
- cperciva 6y ago
  You're assuming that there actually was $8B in transactions. It's possible that there was $800M in transactions and $7.2B in tape painting.
- ullevaal 6y ago
  Yes, for someone whose prior has been: “The price will crater and most people will lose interest”, I think that the thousands of hours of developer time and institutional interest is probably starting to pay of in terms of more mature markets. I still have problems with the idea that people are able to pick the correct winners. When the blockchain finally gets its killer mainstream app, why not do a new ICO on a restarted blockchain instead of a billion dollar wealth transfer to early adopters?
  - xur17 6y ago
    Because all of the money and users that you hope use your killer mainstream app have to come from somewhere - a brand new blockchain makes your app that much harder to launch. In addition, your killer mainstream app may only be useful inside of an existing ecosystem. Ex: Uniswap is pretty useless if you don't have any assets that people want to trade.
peter422 6y ago
Remember folks: If the price goes up, that’s good. If it goes down then you can buy more at a discount, which is also good. It’s a great system where nothing can go wrong.
- awb 6y ago
  Is this sarcasm? Any investment can go to 0, or go down and stay down.
- deleted 6y ago
  [deleted]
tgtweak 6y ago
This is the reality of leveraged trading. If you've put up your crypto as collateral on a loan, which you used to buy more crypto (defi), and the price of the asset backing your loan drops below threshold it gets auto liquidated by the holder and your loan is cancelled out. It is automated in all cases with triggers and varying thresholds. Majority of these are 75-85% ratio which means if btc dips 15-25%, all of those providers liquidate the asset to cover. Btc has also been holding at 60k for a while while alts are enjoying a rally as they tend to do when everyone leverages their btc gains via the aforementioned to buy into alts. I'm surprised it didn't crash further but I guess the defi bubble wasn't as big.
- Godel_unicode 6y ago
  > Majority of these are 75-85% ratio... How do you know that?
haolez 6y ago
I'm waiting for a Tether collapse to create my long position, but I'm starting to feel like Michael Burry in the Big Short: the market can remain irrational for a long time.
- aent 6y ago
  They have a deadline in about a month to reveal what exactly their "reserves" are comprised of, could be the moment.
  - raducu 6y ago
    Did anything changed about tether having to reveal anything about their reserves? This has been going on for years, and it seemed that nobody was able to force them to prove anything.
    - aent 6y ago
      It's part of their recent NY settlement: https://www.bloomberg.com/news/articles/2021-02-23/crypto-exchange-bitfinex-settles-with-new-york-to-end-probe https://www.bloomberg.com/news/articles/2021-02-23/crypto-ex... >New York officials, who originally began investigating Bitfinex in 2019, will receive quarterly reports on composition of Tether’s reserves for the next two years. The companies will end all trading activity with New Yorkers. That starts in about a month
      - raducu 6y ago
        Thanks! There's nothing in the article that suggests that tether will be closed if they are not backed up 100%, so I guess it won't make any real change even if they are not.
      - rasz 6y ago
        Didnt they already had dates set for publishing Audit results in January? and then without revealing anything they obtain a settlement? Show you the scale of money and what it can do. At $Trillions being printed per month they can buy anything.
aent 6y ago
Nothing a healthy 5 billion USDT injection can't fix, just wait a few days.
candiddevmike 6y ago
All crypto coins are fundamentally the same thing, easy to create or fork, and not backed by anything permanent like a government, so the value of them should approach zero over time. There's nothing supporting BTC's price, and I'm of the mindset there are shenanigans occurring to keep it afloat.
- HashBasher 6y ago
  Easy to copy the coin, hard to copy the network effect.
  - candiddevmike 6y ago
    I see the network as a key problem here--the miners will go wherever the grass is greenest, the network isn't permanent. If a coin were to pay them more or suddenly crash, they'd shift their rigs pretty quickly. Same problem Uber and Lyft have.
    - atat7024 6y ago
      Which coins have gone from popular to no longer mined?
- r0m4n0 6y ago
  You can say the same thing with most trading cards but there always seems to be some second hand market that no one understands.
  - candiddevmike 6y ago
    Trading cards have different qualities and actual scarcity though--X number of one card is made, and X is quite low. Crypto is one of thousands of references to imaginary numbers held in a distributed data structure.
- rasz 6y ago
  At current scale of operation and amount of money changing hands Im surprised we dont hear about rival groups hiring mercenaries to disrupt competitor mining operations. Couple millions should be enough for a team to go in, burn down a warehouse full of mining gear and blow up a substation or even full power plant for good measure.
deleted 6y ago
[deleted]
bitcoinmonger 6y ago
Seemed inevitable. I first found out about Bitcoin in 2017, but didn't have time to fully understand the technology, so I brushed it off as a curiosity and moved on. I heard about it again in November at the start of the price increase, but upon further analysis decided not to invest due to the fossil fuels required to secure the network (I extend my thanks to Stephen Diehl for his thorough and nuanced introspection of the technology). I feel sorry for those who have lost money at this time, but I am thankful to have had the foresight to avoid this inevitable price crash.

54 points by awb 6y ago

What's interesting about this is I could see it coming a few days ago. Funding rates on FTX were super high, so you could see people were getting reckless with leverage leading up to this.

dkdk8283 6y ago
FTX?
- hmate9 6y ago
  Its a crpyto exchange
- fighterpilot 6y ago
  It's a crypto derivatives exchange serving non US customers.

basicallydan 6y ago

Predictable angry comment about the stupidly large ad on this site for eToro: apparently my thumbs are too fat to close it, when do I get my complimentary dialling wand? So fat in fact that it opens the ad no matter what I do, only to be told that eToro is not even available in my country. So not only do I see a massive ad that makes the article hard to read, I can’t even close it, and it’s for a product I can’t buy. I hate this, and everybody involved in implementing it should be ashamed of themselves.

patentatt 6y ago

What I hate about Bitcoin is that I have absolutely no idea if this is 1) a good dip to buy, or 2) the start of a much bigger crash. Everything I understand about the topic and the world at large tells me it should be #2, but in retrospect it always winds up being #1. Am I passing up free money today? Or am I smart not to gamble in such an obviously rigged game? Will I look back years from now longingly and wish that I had bought, or smugly and glad that I didn’t. I have absolutely no indication one way or the other. Source: played around with crypto a lot 5-6 years ago, got out of it, and could retire today if I had held.

Avalaxy 6y ago
Spread your chances. Buy some now, buy some again later when it crashes even further. If it doesnt crash further, at least you profited from the current dip.
- netrus 6y ago
  You conveniently left out the scenario where it continues to crash, and OP looses money twice by following your recommendation. It's a casino.
  - fighterpilot 6y ago
    I do like an amended version, which is to buy some now and then unconditionally buy some later, also known as dollar cost averaging.
  - LudwigNagasena 6y ago
    Just like any forex market.
- patentatt 6y ago
  Sure that makes sense, but why? By that I mean, if I'm evaluating stock in a company, or a commodity, I can reason about the investment in terms that I understand, or at least convince myself one way or the other enough to not lose sleep over it even if I lose money. But crypto? I've got nothing. Total shot in the dark. Completely blind. I can make arguments either way, and both seem equally valid, and both based on pretty much no reliable data. Not looking for an answer here, just venting really.
polote 6y ago
How is that different from the stock market ? Maybe you have 'more ideas' but that would not prevent you to be wrong. In both case nobody can predict what will happen next
- fny 6y ago

beforeolives 6y ago

It could be up to 100k in a week, could be down to 20k or anything in between. I honestly have no idea which one is more likely and wouldn't be surprised by any price, high or low. I'm also very skeptical of anyone who claims to know what's happening in the cryptocurrency market and why.

treeman79 6y ago
Zero to infinite. Good arguments all around. If governments decide it’s a threat I imagine it’ll go to near zero. Much to my personal shock that doesn’t seem to be happening.
- kijin 6y ago
  Bitcoin seems to be approaching the realm of "too big to fail." A trillion dollars disappearing overnight could very well precipitate an economic crisis, and no democratically elected government wants to take the blame for that kind of eventuality.
  - raducu 6y ago
    I'm not contradicting you, and I don't think bitcoin will be banned, but the US total stock market capitalization is 49T and 1T capitalization of bitcoin world wide is not an issue. I use those figures to decide on the future price of bitcoin, in case governments actually addopt bitcoin, so a future, very unlikely ~50X increase in bitcoin price is not enough for me to put money into it. I've missed my chance and a very unlikely future 50X increase in price is not worth the risk, imho.
- raducu 6y ago
  I don't like cryptos for multiple reasons, a lot of which could be fixed in the future. But we're way over the phase where governments would ban it, on the contrary, I think bitcoin is a last resort fix for the immense global debt. My wild theory is after elites load up on bitcoin(and also a lot of ordinary folks) governments would change bitcoin to bitcoin 2.0 and completely crash other forms of fiat currency, wiping the huge fiat currency debts in the process and also shutting up all the people who want anonimity in bitcoin(because they would lose a lot of money otherwise).

unyttigfjelltol 6y ago

Serious question: why does a reduction in hash rate lead to a loss of USD pricing? That's analogous to pricing USD based on the number of lights on at the NY Federal Reserve at 10pm on Tuesday. I recognize hash rate moves these markets, but seriously, why?

jpalomaki 6y ago
Value of Bitcoin is a matter of belief. There’s absolutely no way of putting a justified price tag for the coin (at least for now). It can be that people just thought others might think the China news would be bad and therefore decided to sell. In speculative market you are all the time trying to guess what others are thinking.
dylkil 6y ago
>why does a reduction in hash rate lead to a loss of USD pricing it doesnt

mstipetic 6y ago

If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy

iso1631 6y ago
Said the people laughing at those who bought in at $20k in 2017/18
- ttul 6y ago
  Said the people laughing at those who bought at the $30 peak in 2012...
  - iso1631 6y ago
    Quite. If you put $1 a day in since the Big Bang Theory Bitcoin episode aired on 7 December 2017, which is a fair date for when it reached the popular conciousness (13.84 million watched that episode in the US), and bought at the open every day, you'd have converted $1220 into $8600.
- mstipetic 6y ago
  Who gives a shit about a ponzi scheme

h2odragon 6y ago

https://www.zerohedge.com/markets/bitcoin-crashes-much-15-amid-unsubstantiated-report-money-laundering-crackdown https://www.zerohedge.com/markets/bitcoin-crashes-much-15-am... Maybe the hash rate isn't related...

burlesona 6y ago

It’s interesting and a little surprising to me that people selling almost $8 billion in BTC found ready buyers such that the market clearing price only dropped 10%. That’s a lot of money to move, and implies that a lot of other people saw this as a chance to buy a dip.

tedunangst 6y ago
I think these were futures contracts?
Traster 6y ago
Alternatively it could be as simple as lots of people having a crap execution strategy. I’m sure there are thousands of people who just have orders in the book that got swept and others with simple python scripts that “buy the dip” with no concept of risk or stop loss. The question is whether those people need to get out of their positions in the next few days causing a further drop or whether they can hold in which case the price will stabilise and eventually continue to run up.
cperciva 6y ago
You're assuming that there actually was $8B in transactions. It's possible that there was $800M in transactions and $7.2B in tape painting.
ullevaal 6y ago
Yes, for someone whose prior has been: “The price will crater and most people will lose interest”, I think that the thousands of hours of developer time and institutional interest is probably starting to pay of in terms of more mature markets. I still have problems with the idea that people are able to pick the correct winners. When the blockchain finally gets its killer mainstream app, why not do a new ICO on a restarted blockchain instead of a billion dollar wealth transfer to early adopters?
- xur17 6y ago
  Because all of the money and users that you hope use your killer mainstream app have to come from somewhere - a brand new blockchain makes your app that much harder to launch. In addition, your killer mainstream app may only be useful inside of an existing ecosystem. Ex: Uniswap is pretty useless if you don't have any assets that people want to trade.

peter422 6y ago

Remember folks: If the price goes up, that’s good. If it goes down then you can buy more at a discount, which is also good. It’s a great system where nothing can go wrong.

awb 6y ago
Is this sarcasm? Any investment can go to 0, or go down and stay down.
deleted 6y ago
[deleted]

tgtweak 6y ago

This is the reality of leveraged trading. If you've put up your crypto as collateral on a loan, which you used to buy more crypto (defi), and the price of the asset backing your loan drops below threshold it gets auto liquidated by the holder and your loan is cancelled out. It is automated in all cases with triggers and varying thresholds. Majority of these are 75-85% ratio which means if btc dips 15-25%, all of those providers liquidate the asset to cover. Btc has also been holding at 60k for a while while alts are enjoying a rally as they tend to do when everyone leverages their btc gains via the aforementioned to buy into alts. I'm surprised it didn't crash further but I guess the defi bubble wasn't as big.

Godel_unicode 6y ago
> Majority of these are 75-85% ratio... How do you know that?

haolez 6y ago

I'm waiting for a Tether collapse to create my long position, but I'm starting to feel like Michael Burry in the Big Short: the market can remain irrational for a long time.

aent 6y ago
They have a deadline in about a month to reveal what exactly their "reserves" are comprised of, could be the moment.
- raducu 6y ago
  Did anything changed about tether having to reveal anything about their reserves? This has been going on for years, and it seemed that nobody was able to force them to prove anything.
  - aent 6y ago
    It's part of their recent NY settlement: https://www.bloomberg.com/news/articles/2021-02-23/crypto-exchange-bitfinex-settles-with-new-york-to-end-probe https://www.bloomberg.com/news/articles/2021-02-23/crypto-ex... >New York officials, who originally began investigating Bitfinex in 2019, will receive quarterly reports on composition of Tether’s reserves for the next two years. The companies will end all trading activity with New Yorkers. That starts in about a month
    - raducu 6y ago
      Thanks! There's nothing in the article that suggests that tether will be closed if they are not backed up 100%, so I guess it won't make any real change even if they are not.
    - rasz 6y ago
      Didnt they already had dates set for publishing Audit results in January? and then without revealing anything they obtain a settlement? Show you the scale of money and what it can do. At $Trillions being printed per month they can buy anything.

aent 6y ago

Nothing a healthy 5 billion USDT injection can't fix, just wait a few days.

candiddevmike 6y ago

All crypto coins are fundamentally the same thing, easy to create or fork, and not backed by anything permanent like a government, so the value of them should approach zero over time. There's nothing supporting BTC's price, and I'm of the mindset there are shenanigans occurring to keep it afloat.

HashBasher 6y ago
Easy to copy the coin, hard to copy the network effect.
- candiddevmike 6y ago
  I see the network as a key problem here--the miners will go wherever the grass is greenest, the network isn't permanent. If a coin were to pay them more or suddenly crash, they'd shift their rigs pretty quickly. Same problem Uber and Lyft have.
  - atat7024 6y ago
    Which coins have gone from popular to no longer mined?
r0m4n0 6y ago
You can say the same thing with most trading cards but there always seems to be some second hand market that no one understands.
- candiddevmike 6y ago
  Trading cards have different qualities and actual scarcity though--X number of one card is made, and X is quite low. Crypto is one of thousands of references to imaginary numbers held in a distributed data structure.
rasz 6y ago
At current scale of operation and amount of money changing hands Im surprised we dont hear about rival groups hiring mercenaries to disrupt competitor mining operations. Couple millions should be enough for a team to go in, burn down a warehouse full of mining gear and blow up a substation or even full power plant for good measure.

deleted 6y ago

[deleted]

bitcoinmonger 6y ago

Seemed inevitable. I first found out about Bitcoin in 2017, but didn't have time to fully understand the technology, so I brushed it off as a curiosity and moved on. I heard about it again in November at the start of the price increase, but upon further analysis decided not to invest due to the fossil fuels required to secure the network (I extend my thanks to Stephen Diehl for his thorough and nuanced introspection of the technology). I feel sorry for those who have lost money at this time, but I am thankful to have had the foresight to avoid this inevitable price crash.