• Bitcoin price drops to two-month low of $25,300, resulting in $900 million worth of long positions being liquidated.
• Professional traders were affected by the drop, however it is unclear if they gained from it or not.
• Bitfinex margin trading indicated large-scale trading activity prior to the drop.
Bitcoin Price Dips To Two-Month Low
The price of Bitcoin dropped 11.5% from Aug 16th to Aug 18th, causing a massive amount of traders to be liquidated and the BTC price hitting a two-month low at $25,300. This resulted in around $900 million worth of long positions being wiped out.
Did Professional Traders Gain From The Crash?
Cryptocurrency traders often believe that whales and market makers have an advantage when predicting significant price shifts, which allows them to gain an edge over retail traders. However, this doesn’t mean that professional traders are immune to losses when the market gets unstable. It is likely that some pro traders benefited from this crash while others took on major losses due to their hedged positions not matching up with previous trading days.
Large Scale Trading Activity On Bitfinex
Margin trading lets investors magnify their positions by borrowing stablecoins and using them to purchase more cryptocurrency. On Aug 15th, the Bitfinex margin long position stood at 94,240 BTC which was close to its highest point in four months – indicating large scale trading activity prior to the crash. This could suggest that certain professional traders were able to benefit from anticipating a widespread correction before it occurred.
Short Positions Betting On Price Decline
Traders who borrow Bitcoin employ BTC as collateral for short positions – indicating a bet on price decline. As such, many professional traders may have been successful in profiting from this dip by taking on short positions before it happened.
In conclusion, while some professional traders may have gained from this crash due to their advanced quantitative trading software and strategically positioned servers; others likely incurred major losses due to pre-existing hedged positions not matching up with past trends on the market leading up to the crash