The Crypto market witnessed a huge sell-off yesterday as the prices tumbled and several exchanges around the world faced outages due to liquidations and traders panicking.
There does not seem to be any specific reason for the selloff but such volatility has come to be expected in the crypto market. Bitcoin prices tumbled from a high of around 42,000 to around 28,000 (a fall of more than 30%) during the course of the day.
This price crash led to several billions of dollars lost in liquidation and 100s of thousands of traders having their accounts margin called as the angry face of the crypto market was seen yesterday.
Huge price and portfolio increases that were built over the course of several months of hard work were reduced to nil as traders woke up to their margin called accounts. As has been the character of the crypto markets, the bitcoin prices recovered within a few hours to reach $40,000 once again.
The retail traders and mainly the leveraged traders were the ones to suffer as the price increase in bitcoin over the last few months had drawn in more and more small traders who had started using huge leverage in the hope of fattening their account balances quickly. All of these were wiped off in a matter of a couple of hours.
These large numbers of liquidations and panic sell-off led many smaller exchanges to suffer as well as they witnessed their servers getting crashed due to the volatility and huge volume spike. This caused even more panic among the traders and these snowballed into more and more sell orders which finally made the sell-off even worse.
Amidst all this sell-off, exchanges like currency.com continued to stay strong and were able to process all the orders without any issues. It said that it witnessed a spike of 95% in its derivative trade volumes while the number of spot trades increased by 216% but the exchange continued to be robust and managed to handle these spikes with ease.
Christoforos Soutzis, Chief Risk Officer at Currency.com commented;
“We understand that cryptocurrency is a burgeoning asset class and spikes in demand are to be expected. At currency.com, we ensure our internal controls and systems are robust and equipped to handle heightened levels of trading activity such as those we have seen today around BTC. Our mission is to be there for our clients on days like today. We take seriously our commitment to stand by our clients through all market conditions.”
But while the exchanges would be happy to have got additional volume and traders and hence additional income by way of charges and commissions, it is the retail traders who continued to suffer as usual as they were left holding the bag.