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Long Orange Squeeze: Bitcoin's Sudden Tumble A Result Of BitMEX Liquidations

Open interest surged just one hour before the dump.

Long Orange Squeeze Bitcoin's Tumble A Result Of BitMEX Liquidations

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It didn’t take long to reverse any tentative bullish predictionBitcoin has plummeted in the last few hours with a violent fall to below the $7,500 supports, in a move that shows many signs of manipulation.

Altcoins were swallowed by the avalanche, with the market showing a solid red throughout. Most are posting losses in line with BTC, at around 7-8%, but Tezos and BSV are in double digit territory at 11-12%. BAT on the other hand seems to be unaffected, with a +7% so far.

Bitcoin falling as Libra testimony unfolds.
Source: Coin360

What caused the sudden fall?

The bulk of the fall occurred at 8:41 Eastern Time, quickly falling to a minimum of $7,455 for one BTC.

Bitcoin plunging libra testimony
BTC / USD on Bitstamp, 1 minute candles. By TradingView

Some Twitter users are speculating that the fall may be caused by a sudden sell of 3600 BTC on Bitstamp, which cascaded on other exchanges as well.

An analysis from TradingView data shows that the fall may indeed have originated from Bitstamp, as it started about 10-15 seconds before exchanges such as Coinbase and Bitfinex.

Bitstamp caused the bitcoin fall
BTC / USD on Bitstamp, 5 second candles.

The rest may have followed from automated algorithmic traders and exchange stop-loss orders, explaining why the time gap would be so short.

Noteworthy is that BitMEX’s Price Index is derived from just three exchanges: Bitstamp, Coinbase and Kraken. A potent sell order on just one of them, added to the natural cascading effect, could be used for market manipulation.

Liquidations on BitMEX amounted to $180M today, according to data, while open interest was approaching a several months-high of 110,000 BTC ($900M at yesterday’s prices). What’s even more damning is that the figure surged just one hour before the dump.

Bitmex long squeeze behind fall.

While the Libra testimony may have been used as a candidate catalyst, today’s fall shows fairly conclusive signs of market manipulation to reap rewards from BitMEX futures.

At the same time, Bitcoin’s indicators provided fertile ground for this behavior.

The technical outlook was weak, with Bitcoin approaching the death cross and trading below the 200-day moving average. A low-volatility environment has also led traders to place orders around the restricting resistances, which were then easy to suddenly break for even greater effect.

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