Bitcoin prices immediately after the collapse of the Bitfinex exchange fell 14%
Bitcoin exchange Bitfinex last night after the flash crash just 30 minutes of bitcoin prices fell 14%.
Coindesk bitcoin price index has been relatively steady at $250 to $255, but before midnight (coordination time) plunged to $214.36. At the same time, Bitfinex’s share price fell to $179.35, a decline of 29%.
Bitfinex is known as the most liquid in the world but in exchange, a $10 thousand bitcoin ($2 million 300 thousand) of the single shot but after the flash crash.
Update this morning 03:22 the exchange’s Twitter content: “during a large number of bitcoin selling stock sale is legal, but also for the purpose of profit, lenders are not affected.”
Bitfinex in addition to providing bitcoin Trading Commission normal, while also providing margin trading, which means that users can exchange platform from lenders (peer liquidity providers) with a certain interest rate borrow funds bitcoin transactions, bitcoin prices rise under long or short bets.
A sudden price happened yesterday concussion, when borrowing funds traded long user account assets fell to zero, Bitfinex exchange will automatically liquidate their futures positions. This will undoubtedly intensify bitcoin price volatility, the futures position brings pressure to the seller will continue to have the market crash.
There are some easing of such price fluctuation fierce method, such as some traditional exchanges will be limited to 10% of the fluctuation space before closing price of the day, but the Bitfinext exchange is such a circuit breaker is still not known.
In an interview with “whale club” members, Bitfinex PhilPotter suggested that bitcoin platform encountered many technical problems, including updating the information service engine lagged buzz.
Bitcoin derivatives trading platform CryptoFacilities CEOTimoSchlaefer told the CoinDesk that the exchange margin trading bitcoin price instability, caused many times in the past the flash crash. Last August, Bitfinex and BTC-e of the flash crash caused by bitcoin prices fell 10%.
“Do you want to firmly do only cash (no margin trading) or other what, you need to make a choice between this, cannot be both.” He added: “this is very bad for the bitcoin, because bitcoin market is still very immature and unreliable, but this does not seem to be what progress last year.”
Margin trading in most markets have been very popular, but for the bitcoin market is still relatively new phenomenon. The trading margin increased in the past two months, only two exchanges.
However, a hope that anonymous bitcoin market maker said the flash crash does not happen in a margin trading market. “Even if not borrowing from bitcoin platform, if you want to engage in margin trading, you will want to borrow money to maintain the habit of gambling.”
He also said that the field of bitcoin “gambling mentality” has also exacerbated the bitcoin price volatility, trading side to use leverage to take financial risks.