The recent crash of Bitcoin sent waves across crypto Twitter and there was widespread panic as enthusiasts half expected a major market crash. While some panicked, others remained calm and assessed the situation. It was noticed that there was a huge sell order on Bitstamp, which pushed the price of Bitcoin by ~20% in a few minutes.
The community noticed that a huge sell order of approximately 5,000 BTC was triggered on Bitstamp, which was the sole reason for the dump in Bitcoin’s price on Bitstamp. The exchange even put out an official statement saying that they have started an investigation into the matter.
The price of Bitcoin dipped as low as $6,194 on Bitstamp and on BitMEX, it collapsed to $6,380. A lot of investors blamed BitMEX for the dump. A Twitter user @DoveyWan, commented:
🤢🤢🤢 Bitmex is a great platform with great liquidity but its price index relies on two ex (Bitstamp and Coinbase) with shit liquidity, that defeats the whole purpose
20k+ BTC has been liquidated by a 5000 BTC dumping scheme pic.twitter.com/D8Lj2z9O5t
— Dovey Wan 🗝 🦖 (@DoveyWan) May 17, 2019
BitMEX is a leverage trading platform that trades a derivative of Bitcoin XBT. The exchange uses BitMEX.BXBT Index for the XBTUSD Perpetual Contract and XBT Futures Contracts.
According to BitMEX,
“The BitMEX .BXBT Index tracks the Bitcoin price every minute. The Bitcoin price is calculated from the last price at BitMEX Index. The .BXBT index price is shown on many pages as the current Bitcoin price.”
Since BitMEX only relies on two exchanges for the price and one of the exchange was affected, the price of Bitcoin dipped steeper on BitMEX as well. About $209 million worth of long positions were liquidated during the crash.
A Twitter user @lowstrife tweeted:
Bitmex insurance fund +750 btc from this dump. pic.twitter.com/BZBoAjmCFE
— lowstrife (@lowstrife) May 17, 2019
The liquidated Bitcoins were stored in BitMEX’s insurance, the balance for which had increased over 750 BTCs due to a crash in the price of Bitcoin for a few minutes.
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