The Crypto market loses $2 billion to liquidation
The Crypto market has been at the forefront of back and forth in the last few weeks, gains were made, losses were equally recorded now in billions even.
The most recent is the outcome of the Tuesday event where traders borrowed excess capital from brokerage/exchanges to place huge bets on prevalent assets being traded.
This action leads to liquidation, while traders paid a fixed fee for borrowing to bet high on assets, eventually, the traders collateral equals the loss obtained.
Consequently, according to Bybt, about $8 billion worth of cryptocurrencies were lost in the rade.
Below are the details of the impact loss as felt by each cryptocurrency
- Bitcoin alone lose $1.42 billion
- Ethereum lose $1.6 billion
- XRP lose $255 million
- Dogecoin $127 million
- MATIC $46 million
- By bit took the hit at $534 million
- Huobi $521 million
83% of the traders borrowed significantly to bet on the prevalent high prices.
Consequently and overall, over 297,260 traders were liquidated, with the large single liquidation order occurring on Huobi, the bitcoin trade came with the value of $63 million.
The main reason behind the Bitcoin drop
Bitcoin drop was attributed to China’s “FUD,” this may be coming as a not too popular term to you, do not worry I will discuss the basis and meaning of “FUD.”
FUD, as used in the crypto market, means, “Fear, Uncertainty, and Doubt.” This may be born when someone spreads false, negative, and misleading information.
When this happens, it’s capable of sowing doubts in the minds of several investors.
Now, the market took a drop as a result of fear, doubt, and uncertainty that arose with news making rounds that China bans crypto trading.
Chinese authorities on Tuesday reiterated their crypto warnings, this sends the prices of cryptocurrencies downward.
In this development, three of the Chinese industry bodies under the Central Bank of China released a document calling for a ban on financial institutions and online payments systems providing services that involve cryptocurrency.
Similarly in a statement, the National Internet Finance Association of China, in banking and clearing also warn investors against speculative crypto trading, citing that cryptocurrencies are not supported by real value.
In light of this, China has not prohibited individuals from holding cryptocurrency.
While individuals can participate, Chinese institutions and companies are not to be involved in cryptocurrency just like the current situation in Nigeria.
The crypto market hopefully will bounce back in the coming days, giving there’s no ban on individuals to trade cryptocurrencies, the peer-2-peer platforms will continue to aid traders to get involved in the market.