Bitcoin [BTC], the largest cryptocurrency by market cap, saw a massive crash in the market, earlier today. The coin that gained over $2000 within a few days, lost over $1500 under two hours. This plunge also resulted in the liquidation of over $207 million worth of long positions on BitMEX, Bitcoin Mercantile Exchange. This, in turn, resulted in the majority of the market discussing the reason behind the crash, with some throwing the blame on Bitstamp. Following this, the exchange also released an official statement on the events.
Dovey Wan, the co-founder of Primitive Ventures, explained the reason for the crash on Twitter. Wan stated that “a jackass put up an aggregated sell of 5000 $BTC on stamp”. Notably, the coins were sold at a low price of $6200, thereby resulting in the price massive drop.
This is what happened
1. A jackass put up an aggregated sell of 5000 $BTC on stamp
2. Stamp poor depth + algo glitch?
3. Bmx index is 50% on stamp
4. Massive Bmx liq tanked the mkt
5. Despite all BTC quickly bounced back to $7000
This might be the best chance to BTFMD
— Dovey Wan (@DoveyWan) May 17, 2019
Interesting, BitMEX’s price index is weighed using the price on Bitstamp and Coinbase Pro. Since BitMEX’s 50 percent of price index was Bitstamp, it led to a massive long liquidation, thereby resulting in the market crash.
On this, Bitstamp stated on its official Twitter platform,
1/2: A large sell order was executed on our BTC/USD pair today, strongly impacting the order book. Our system behaved as designed, processing and fulfilling the client’s order as it was received.
— Bitstamp (@Bitstamp) May 17, 2019
It further stated,
“2/2: We closely examine every event that causes large-scale movement in our order book and have started an immediate case investigation.”
According to CoinMarketCap, at press time, Bitcoin was trading at $7336.57 with a market cap of $129 billion. The trading volume of the cryptocurrency was $31 billion and the price has witnessed a significant drop of over 8 percent in the past 24-hours.
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