Highlights:
  • Bitcoin plunges to $3.8K for the first time since April 2019.
  • The cryptocurrency’s deep dive came alongside a massive liquidation spree on the BitMEX crypto exchange.
  • The price recovered by $2,000 but left the market in further distress, especially amidst the rising Coronavirus risks on global financial markets.
Bitcoin fell to its 10-month low this Friday the 13th as liquidation went rampant on crypto derivatives exchange BitMEX.
Sam Bankman-Fried, the CEO of Hong Kong-based crypto derivatives exchange FTX, alleged that BitMEX failed to liquidate an adequate number of bitcoin tokens from leveraged long positions. He noted that the exchange’s order-book was ten times thinner than what was required to balance the liquidation demand.
As a result, the XBT/USD contract rate on BitMEX fell to $3,596, much lower than the cryptocurrency’s spot price across other exchanges. The pair staged a sharp reversal – of more than $2,000 – only after BiTMEX went offline. Mr. Bankman-Fried noted that bitcoin risked falling to zero had not BitMEX shuttered its trading.


SBF@SBF_Alameda
 · 

Replying to @SBF_Alameda
11) And then, when things were teetering on the edge, with quarterly premiums at -15%.......

BitMEX went down for maintenance.


SBF@SBF_Alameda
12) BTC rallied without the gigantic sell wall of the BitMEX liq. And even more than that--BTC rallied, so fewer people *had* to be liquidated..... Creating a self-fulfilling prophecy. If we could will BTC up above $5k, maybe then it would no longer *need* to go down.

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4:30 AM - Mar 13, 2020
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BitMEX denied Mr. Bankman-Fried’s allegation, labeling it as a “conspiracy theory.” But the liquidation of $993 billion long positions on its platform left the entire cryptocurrency market in a deep state of shock, with Atlanta-based mining firm BitPico even saying that BitMEX orchestrated the crash.
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“Per our analysis, BitMEX liquidated $993 billion long positions using their own bots & capital,” it tweeted. “[At around] 2:43 UTC, activity across all exchanges stopped and BitMEX database crashed. Today’s BTC manipulation was caused by one entity.”

Bitcoin’s V-Shape Recovery

Bitcoin’s spot rate on Coinbase exchange plunged to $3,858 as of around 0200 UTC on Friday. After BitMEX’s standby, the cryptocurrency rebounded to as high as $5,858, its gains partly following upside moves in global equities. It so far fell in tandem with the US indexes as a rapidly growing Coronavirus pushed the global economy to the brink of recession.
bitcoin, cryptocurrency, crypto, btc usd
BTC/USD recovers by circa $2,000 after diving to $3.8K | Source: TradingView.com, Coinbase
Bulls have pinned hopes for a broader bitcoin recovery as the market heads to neutralize its oversold technical indicator, the Relative Strength Index, or RSI. At below 30, RSI signals a move upward in the coming sessions, given its history of leading price recoveries.
bitcoin, cryptocurrency, crypto, btc usd
Bitcoin climbs above 200-week MA | Source: TradingView.com, Coinbase
Also, on bitcoin’s weekly chart, the price is maintaining a strong floor near its 200-week moving average wave. The indicator has previously called out bitcoin’s bottoms, which means there is a possibility that bitcoin could floor-out at $5,500, followed by a decent bounce to the upside.

The Coronavirus Pain


Bitcoin’s latest upside also followed stimulus packages announced by the European Central Bank and Federal Reserve to protect economies from the Coronavirus fallout. The ECB decided to offer cheaper loans with interest rates fixed at negated 0.75 percent. It also expanded its bond purchasing program.