Bitmex Sees $500 Million Bitcoin Short Liquidation in 24hrs

June 27, 2019

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Bitcoin trading activity is breaking all-time records in terms of volume and open interest in Bitcoin futures. The latest trading activity has caused Bitcoin’s value to reach an 18-month high, forcing a huge amount of Bitmex short-sellers to abruptly liquidate their positions.

Bitcoin Futures Hits Record Highs 4 Days Running

CME saw a record volume of USD 1.6 billion and record open interest for Bitcoin contracts of USD 373 million, on June 26, 2019.

The value of BTC rose to almost USD 14,000, causing short traders to liquidate over half a billion dollars in a single day.

> $500 mln liquidated in last 24h – mostly on the sell side.

Longs could be more leveraged than shorts as some shorts might be used without leverage to create synthetic dollars. pic.twitter.com/ER8iYmk2nz

— skew (@skew_markets) June 27, 2019

At the Chicago Mercantile Exchange (CME) Bitcoin futures trading activity has been growing spectacularly in recent months, with institutional traders showing increasing interest. On June 20, 2019, CME reported,

CME Bitcoin futures open interest reaches a record for a fourth consecutive day, with 5,827 contracts traded on June 20 (29,135 equivalent bitcoin; ~$280M notional) and a 25% increase from last Friday.

Cryptocurrency optimists take long positions, while traders who are bearish take short positions. According to Commodity Futures Trading Commission (CFTC) data, big money traders, such as hedge fund managers, have been taking bearish positions. The Wall Street Journal reports,

Hedge funds and other money managers held about 14% more bearish ‘short’ positions in CME bitcoin futures last week than they did bullish ‘long’ positions, according to a recent Commodity Futures Trading Commission report.

So, when on June 26, 2019, the cryptocurrency neared the USD 14,000 mark, traders who had taken short positions were forced to execute massive liquidations.

Small Investors Remain Bullish

Hedge managers and other large traders have been bearish on BTC since February 2019. However, a bearish position taken by a hedge fund manager does not necessarily mean a bet against the cryptocurrency, as The Wall Street Journal explains,

Such data don’t necessarily mean hedge funds are placing outright bets that bitcoin will drop. The short bets could also be part of hedging strategies: for instance, a fund with a portfolio of bitcoins might go short at CME as insurance against the value of bitcoin dropping.

Moreover, positive signals about BTC continue to abound. For example, small investors remain bullish. According to The Wall Street Journal report, traders with fewer than 25 BTC contracts hold long positions outnumbering short bets by four to one.

What do you think about the latest Bitmex liquidation figures? Let us know in the comment section below!

Images via Twitter/@skew_markets, Bitcoincharts.com,

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