For bitcoin, a 10% price dump in a day is nothing to fuss about. As bitcoin grows a reputation along the lines of such price volatility, investors are fast becoming more tolerant of its various range-bound intraday price swings. However, when bitcoin crosses critical areas of interests, this may sometimes stir criticism and hopes, altogether causing controversy.
The news fast making waves today, (i.e February 27, 2020) is based on bitcoin’s rapid price dump. At least, within the last 24 hours, the controversial cryptocurrency takes a price dive to lose more than 5% in its value. As this may not particularly cause panic, the downside is that bitcoin does this in continuation of a downtrend it began a few days ago, accumulation of which results in about 15% price dump. At the moment, bitcoin changes hands at $8,681 and further downside seems realistic.
$196 Million Liquidations At BitMEX
Amid bitcoin’s recent price ordeal, other major altcoins seem to find similar “mining sites” as they all drill down the bottom of the charts. Eth down by 10%, XRP, and BCH both by 6%. Although, compared to last year’s closing price, both BTC and major alts see a year-till-date (YTD) price gain.
At the height of bitcoin’s price panic, trading against bitcoin proves very profitable for popular cryptocurrency exchanges. Anyway, traders never stop being burnt in such scenarios.
According to data analytics provider Skew, around $6.1 million buy and $190 million sell liquidations occurred, bringing it to a total of around $196 million worth of bitcoin (BTC) long and short positions.
Beginning at around 14:00 UTC on Feb. 26, the price of BTC began to fall below $9,000. An hour later BitMEX saw its largest amount of liquidations since the new year began, rising well above $100 million.
Bitcoin: Safe Haven Or Not?
Many bitcoin investors are preaching the “bitcoin as a noncorrelative asset narrative.” It is generally believed that a rise or fall in the price of stocks does not necessarily define the possible behavior of bitcoin. Bitcoin has a distinct behavior and price action.
However, economic crises, the likes of coronavirus poses a lot of threat as many investors impose the safe-haven status on bitcoin, expecting it to behave differently from stocks that are actively falling into ruins. To some, considering the YTD price gain of bitcoin, the top cryptocurrency is a good match while others slander it due to pointers of extreme price volatility within a short time.
“Bitcoin has been uncorrelated to other asset classes. If stocks drop, this does not mean bitcoin has to pump. If gold prices climb, this does not mean bitcoin will rise with it every time,” Coinist research analyst Luke Martin noted in a tweet.
In addition, options volumes on OKEx, another popular crypto derivatives exchange, saw the largest uptick of notional volume in its history, above the $15 million mark.