Editor's Note: This article comes fromChain catcher (ID: iqklbs), Author: Gong Quanyu, reproduced by Odaily with authorization.

Editor's Note: This article comes from

Chain catcher (ID: iqklbs)

, Author: Gong Quanyu, reproduced by Odaily with authorization.

From 12:00 on March 12th to 12:00 on the 13th, Bitcoin, the most influential currency in the cryptocurrency industry, experienced two sharp falls, with its price falling from a maximum of $7,672 to a minimum of $3,800 (data from Huobi, below The same), a drop of 50.4%, this drop means that the price of Bitcoin has achieved a fairly precise "price halving" within these 24 hours.

Previously, the "halving market" of Bitcoin was mostly considered to be a rising market formed by stimulating the market price of Bitcoin under the condition of halving the output, although many people have ridiculed the "halving market" as " The price will be halved”, but when Bitcoin gets out of the current bad market, it still surprises most investors.

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first plunge

The bad 24 hours started at 12 o'clock on March 12th. Due to the rapid spread of the new crown epidemic in Europe and the United States, the global financial market has been cloudy and rainy for the past few days. The price fell below $7,600 for the first time, breaking the psychological expectations of many investors, entering a rapid decline channel, and fell to $7,200 around 18 o'clock.

At this time, the decline of Bitcoin is still around 7%, which is not uncommon in the history of Bitcoin. However, after 18:00 on the same day, the market took a sharp turn for the worse, and the price of Bitcoin plunged again in a short period of time, falling to US$5,555 within tens of minutes, a drop of 28%, and the liquidation of contracts on various platforms exceeded US$2 billion.

During the decline, most mainstream exchanges such as Huobi, Binance, and OKEx experienced varying degrees of system freezes. Many users complained for a long time that the exchange APP could not display the home page, market page, and transaction page normally, and the positions, stop loss, and withdrawal Operations such as orders and cash withdrawals have encountered obstacles. This situation also highlights that mainstream exchanges still have not been able to better address the response capabilities of their own trading systems under extreme market conditions.

For this decline, the collective sell-off of large Bitcoin holders is considered to be the main reason. The news from the exchange said that the selling volume of Bitcoin reached 400,000.

For a long time, Bitcoin has been called "digital gold" by the blockchain industry, which has good hedging properties. When the tension between the United States and Iran was tense and the global stock market fell in January this year, Bitcoin rose from $7,200 to more than $10,000. Under the risk of a global economic downturn, the price of Bitcoin has fallen to the extent that it has become the asset with the largest depreciation rate among all kinds of mainstream financial assets, and its hedging attributes will most likely be shattered since then.

Some analysts believe that Bitcoin should be classified as an alternative asset. At the moment when the liquidity shortage is extremely serious, Bitcoin, as a high-risk alternative investment asset with the highest volatility in the world, will naturally be withdrawn from the market by investors. In search of safer, more liquid assets, prices plummeted.

However, there are also industry insiders who hold different opinions. "BTC is still the most powerful currency in human history. It provides liquidity 24 hours a day, which is unimaginable in other markets. When funds are in short supply, selling is the first choice for supplementary funds, which also leads to the decline of gold, and BTC's current volume is far lower than gold, of course it cannot resist it in a short period of time." A Weibo blogger " fhrp" thinks.

In addition to the sell-off of large institutions, some mortgage lending platforms have also passively become an important booster for this decline. In the past half a year, the concept of Defi has been particularly popular in the blockchain industry, and many cryptocurrency lending platforms based on currency mortgages have been born.

As a result, a large number of large bitcoin holders will pledge the bitcoin in their accounts to third-party lending platforms, and use the borrowed USDT to buy spot, which is equivalent to increasing leverage. However, these platforms are immature in terms of mortgage rate setting and liquidation mechanism, and the transfer speed of the assets that users increase the mortgage rate on the chain is relatively slow. As a result, during the rapid market decline this time, a large number of mortgage orders showed that the mortgage assets were lower than the loan assets. In addition, the amount of Bitcoin off-site liquidation this time is far more than the previous period of large market shocks, which further intensified the selling pressure on the Bitcoin spot market.

From 19:00 on the 12th to the early morning of the 13th, the price of Bitcoin hovered in the range of 5800-6200 US dollars, and the market began to prepare for the next stage of the trend.

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second plunge

On the night of the 12th, the stock markets of mainstream countries in Europe and the United States opened one after another and fell collectively. The stock markets of at least 11 countries, including the United States, Canada, and the Philippines, experienced circuit breakers. At the close in the early hours of the 13th, both the Dow Jones Industrial Average and the S&P 500 recorded their largest one-day percentage declines since the 1987 stock market crash. The Dow closed down about 2,352 points, the largest drop in history.

The poor performance of the stock market was quickly transmitted to the currency market. Starting from 7 o'clock on the 13th, the price of Bitcoin plunged again from the position of 5,800 US dollars, and fell all the way, falling below 5,000 US dollars and 4,000 US dollars in succession.

For this rapid market decline, many people in the industry believe that the main factor is not only the panic selling in the market, but also the mutual trampling of contract investors. Weibo blogger "AlbertTheKing" pointed out that most of the leveraged long positions of Bitcoin are in the perpetual contract market of BitMEX. The serial liquidation of long positions caused by the decline in the price of Bitcoin led to the arbitrage price difference with the spot Bitcoin, and the arbitrage Dang rushed in to open long orders and sell spot arbitrage at the same time, thinking it was okay, but he didn’t expect that Bitcoin fell more and more violently, and his long arbitrage positions also exploded. So at first, leveraged bulls stepped on each other, and later turned into arbitrage parties trampling each other .

"fhrp" also pointed out that because BitMEX only has BTC margin, ETH's perpetual liquidation needs to be undertaken by BTC, and the profit part of the hedging order cannot be included in the margin, and because BTC is stuck on the transfer road, it is seriously in short supply. Due to the opaqueness of the liquidated warehouse receipt, no one dared to pick up the dead body, fearing that he would become a dead body. Of course, the most important thing is the lack of a circuit breaker system, so that the market can wait for the liquidity to catch up.

Under the interweaving of many risks, the price of Bitcoin fell below 3,800 US dollars at about 10:15 on many exchanges such as Huobi and OKEx, a 38% drop from the 0:00 price of the day and a 50.4% drop from 24 hours ago. This is the highest 24-hour decline in the history of Bitcoin since its inception.

Such a precise drop rate cannot but be suspected to be the bad taste of the dealer behind the scenes of the exchange, if the dealer does exist. Of course, it is not ruled out that this situation is due to the tacit understanding among the main market participants, or it is a purely natural phenomenon.

However, judging from objective facts, there is indeed some evidence that this situation does not occur naturally. After Bitcoin hit a low of $3,800, its price turned to a rapid rise in the next 20 minutes, rising 59% to $5,250, but then fell rapidly. At the turning point of $3,800, that is, at 10:16, the BitMEX trading system, the largest bitcoin exchange in the cryptocurrency industry, suddenly went down and did not return to normal until 10:40.

It can be seen that the time point when the price of Bitcoin stopped falling rapidly and rapidly rising was very close to the time point when BitMEX went down and returned to normal. This not only shows that BitMEX has a huge influence on the secondary market, but also makes many People suspect that BitMEX is manipulating the market.

Sam Bankman-Fried, CEO of derivatives exchange FTX, said on Twitter that he suspects BitMEX may have deliberately closed trading to prevent further crashes and avoid tapping the exchange insurance fund. Mining company BitPico also tweeted yesterday, “According to our analysis, BitMEX Research used its own robots and capital to close out $993 million in long positions. Today’s Bitcoin market manipulation was caused by an entity, and the investigation is ongoing. "

Regarding the incident, BitMEX responded that the cloud service provider had a hardware problem, and pointed out in a follow-up announcement that DDoS attacks were the real cause of the short-term downtime.

It is difficult to ascertain exactly why the BitMEX trading system went down, but judging from its objective impact, its short-term downtime played a vital role in curbing the further decline in the prices of cryptocurrencies such as Bitcoin, and eased investment to a certain extent. Investors' panic, and indirectly created space for the rebound and callback of cryptocurrency prices such as Bitcoin.

Sam Bankman-Fried even speculated that if BitMEX hadn't gone offline due to "hardware issues" this morning (February 13), the price of Bitcoin could have dropped to zero.

If compared with the traditional financial market, the effect of the BitMEX downtime event is quite similar to the "circuit breaker" mechanism of the stock market, which suspends trading for tens of minutes at the moment when investors are most panicked. It also aroused the emotion of many people in the industry.

"BitMEX helped the currency circle "fuse", otherwise this serial stampede with no liquidity does not know where it will fall. After the circuit breaker, everyone stabilized their minds, and the market returned to normal. Weibo blogger "Blockchain William" tweeted, "The market is not afraid of falling, it is afraid of being trampled. gone."

Of course, the factors that caused the reversal of market conditions did not stop there. According to the reflections of many users on social platforms, several mainstream exchanges such as BitMEX and Binance forcibly closed the short positions of multiple accounts at 10 o'clock on March 13, that is, the automatic position reduction mechanism was in effect.

According to the BitMEX platform mechanism, when investors' contracts are forced to liquidate, their remaining positions will be taken over by BitMEX's forced liquidation system. However, if the forced liquidation position cannot be liquidated in the market, and when the mark price reaches the bankruptcy price, the automatic position reduction system will reduce the position of the investors holding the opposite position, and the order of the reduction is determined according to the leverage and profit ratio .