Bitcoin super market encounters flash crash and liquidation risk surges

Source: China Securities Network

Bitcoin's super market encountered a challenge today. Starting at 4 p.m., a large number of sell orders appeared, and the highest price of Bitcoin reached 8,895 yuan, but then fell below 8,732 yuan and plummeted all the way. In just half an hour, it fell to 7,100 yuan, a drop of 20%, and an amplitude of 25%.

As of press time, the price was hovering around 8,000 yuan. Previously, Bitcoin had been rising rapidly, with a 15% increase in the four trading days before the New Year. It successfully broke through 8,000 yuan in the early morning of the 5th, and has since set new historical highs, reaching a new high of 8,895 yuan at 13:00, which is also the latest historical high of Bitcoin.

“This time, Bitcoin hit a record high not only because of the anticipation for blockchain, but also because of its safe-haven properties. However, judging from recent transactions, the gaming element has prevailed,” said a senior blockchain researcher.

This round of Bitcoin's super market has far exceeded market expectations, and the momentum of the rise has intensified after the New Year, resulting in trading congestion. The APP of a well-known company platform even had a system busy and could not trade normally in the afternoon, and could only recommend customers to trade on the WEB version.

At this time, the risk has quietly arrived. At 4 pm today, many senior investors used futures to short Bitcoin. After falling below 8,732 yuan, the price of Bitcoin plummeted all the way, falling to 7,100 yuan in just half an hour, a drop of 20%. In the evening, Bitcoin returned to the 8,000 yuan level and fluctuated.

OKCoin analysts said that after a series of short squeezes, Bitcoin prices have accumulated a large number of profit-taking orders, and today's sharp drop is the result of concentrated profit-taking. The current market's long confidence has suffered a heavy blow, and it has also dampened the bullish enthusiasm of most investors, and it is difficult for market confidence to recover in a short period of time.

According to the reporter, this adjustment has indeed had a significant impact on the enthusiasm of many investors. Since many platforms have leveraged transactions, the available leverage is usually 5 times, but a 20% drop is enough to wipe out some aggressive unilateral long investors instantly. Due to the characteristics of Bitcoin trading 24 hours a day and no limit on price fluctuations, it is destined to be a high-risk product.

"Bitcoin itself is a high-risk product and should not be traded in a gambling manner," said Wu Xing, an analyst at Huobi.com. Wu Xing believes that although the market is good this year, we should also pay attention to risk control. "Bitcoin is still a valuable product in the long run, but it cannot be operated in the short term. In the context of crowded trading, extreme market conditions will occur."

A well-known Bitcoin investor told reporters that due to the rapid short-term increase and the high demand for cash during the Spring Festival, adjustments are inevitable. Overly optimistic investors will definitely face the risk of liquidation once they participate in leveraged trading. It is reported that well-known platforms such as Huobi have reduced leverage to 2 times.