The price of Bitcoin (BTC) fell by 11.5% from Aug. 16 to Aug. 18, resulting in $900 million worth of long positions being liquidated and causing the price to hit a two-month low. Before the drop, many traders expected a breakout in volatility that would push the price upward but this was obviously not the case. With the substantial liquidations, it’s important to address whether professional traders gained from the price crash.
Bitcoin just saw one of its largest daily liquidations by volume in history.
Starting at 4:30 PM yesterday, #Bitcoin fell 7.5% in 20 MINUTES, erasing $42 billion in market cap.
This mass-liquidation event involved more outflows in 1 day than during the FTX collapse in November… pic.twitter.com/KmVNkXoOLw
— The Kobeissi Letter (@KobeissiLetter) August 18, 2023
There’s a common belief among cryptocurrency traders that whales and market makers have an edge in predicting significant price shifts and that this allows them to gain the upper hand over retail traders. This notion holds some truth, as advanced quantitative trading software and strategically positioned servers come into play. However, this doesn’t make professional traders immune to substantial financial losses when the market gets shaky.
For larger-sized and professional traders, a majority of their positions may be fully hedged. Comparing these positions with…
