Author: Jana Serfontein

Jana has keen interest in what cryptocurrencies have to offer in regards to NGO’s, governments and the financial system. And is also intrigued with the psychological effect that cryptocurrencies have on society.

Categories
Crypto Art Crypto News DeFi Investing NFTs

Think the NFT Market is Overheated? Now You Can Short It

Singapore-based decentralised derivatives exchange SynFutures is launching NFTures, a product that will allow users to short, or bet against, the future prices of non-fungible tokens (NFTs) such as CryptoPunks.

Holding NFTs and hoping their value increases so you can resell them for a profit is currently the only way you can make anything out of them. Many are questioning the value of NFTs, with the tokens serving no purpose besides being able to be bought or sold.

SynFutures is looking to change the way we derive profit from NFTs.

The Mania Continues

NFTs have realised immense growth in recent months, generating US$10.7 billion in trading volume during Q3, a staggering increase of 704 percent on the previous quarter. Projects like EtherRock, CryptoPunks, and Bored Ape Yacht Club have generated sales worth millions of dollars. Earlier this month, internet personality and investor Gary “Gary Vee” Vaynerchuk sold a handful of NFT doodles worth more than pieces from famous artists such as Andy Warhol and Jackson Pollock.

SynFutures is getting on the NFT train with NFTures, a product targeted toward retail investors. It uses a similar user interface to dating app Tinder in an effort to streamline the trading process, while at the same time bringing game-like elements and leverage to NFT markets.

NFTures is a decentralised protocol based on SynFutures’ existing synthetic automatic market maker (sAMM) model to match its competitors.

NFTures user interface. Source: SynFutures

Allowing Users to Maximise Profits

Rachel Lin, CEO and co-founder of SynFutures, said of the new venture:

Every healthy financial market needs a way for participants to take both sides of the market, and NFTs are no exception … By providing a way for users to take long or short positions in NFTs, we’re enabling more robust trading strategies that allow users to maximise profit opportunities while hedging risk and exposure.

Rachel Lin, CEO and co-founder, SynFutures

The company explained further in a statement that: “Those who wanted to speculate on downward trends had to bet against entire markets, shorting the native tokens of NFT-centric products like Axie Infinity ($AXS) and SupeRare ($RARE).

“With NFTures, SynFutures has created an intuitive platform for traders to long or short specific NFTs at any time and take advantage of better price discovery.”

The Risk Remains as NFT Market Continues to Grow

NFTures’ contracts are based on spot price oracles from decentralised exchanges such as SushiSwap and Uniswap, along with NFT fractionalisation protocols including Fractional and Unic.ly.

As with traditional futures markets, the spot and futures prices converge on a set periodic schedule.

Risks of oracle price manipulation remain a concern for many as the budding NFT market continues to grow in size and liquidity. Product designer and Coinbase investor Bobby Goodlatte took to Twitter to provide his take on the future of NFTs:

Albeit with some concerns, NFTures highlights the renewed interest in NFT-related DeFi projects, including the tokenisation of physical assets and NFT-backed collateralised lending. As the popularity of DeFi increases, investors are looking to seize niche markets within the industry.

Earlier this year, SynFutures raised US$14 million in a Series A funding round led by Polychain Capital. Investors included Pantera Capital, Bybit, Framework Ventures, Kronos, and IOSG Ventures. SynFutures indicated that it aims to focus its entire platform on derivatives and wants to eliminate the barriers to entry to the derivatives market.

Lin has stated that SynFutures’ overall goal is to “democratise the futures market”, and added:

We’re aiming to level the playing field for the average investor by cultivating a free and open market for derivatives trading.

Lauren Stephanian of Pantera Capital also said:

NFT-specific derivatives products will add more depth to the nascent NFT market, just as options and futures contracts play an important role in established financial markets.

Categories
Australia Crypto News Facebook Oxen Social media

Facebook Ecosystem Outage Begs The Question, ‘Time for Decentralised Networks?’

In the early hours of Tuesday, October 5, social media giant Facebook, along with Instagram and instant messaging service WhatsApp, went down due to what it has called a “faulty configuration change”. The massive outages, announced on Twitter, left billions worldwide unable to communicate, and as a result the question on everybody’s lips is: “Is it time for decentralised networks?”

Early on October 5, the outage tracking website Down Detector had logged thousands of reports for all three sites. Facebook would not load at all, while Instagram and WhatsApp were accessible but users could not send messages or load new content.

Outages reported in the affected period. Source: Down Detector

Facebook Under Fire

A mere two days after US data engineer and Facebook whistleblower Frances Haugen claimed that the social media conglomerate is fully aware of how its platforms are being used to spread misinformation, hate and violence, and has actively tried to hide this evidence, Facebook and its associated platforms went down for approximately six hours. Facebook has denied the claims.

Still, the outcry against Facebook is only adding to the company’s woes. At a US Senate hearing on September 30, Senator Richard Blumenthal hounded global head of safety for Facebook, Antigone Davis, about Facebook-owned Instagram and its potential negative impact on children, specifically young girls and their body image.

The outage and general bad press surrounding Facebook and its founder, Mark Zuckerberg, saw Facebook’s share price drop 4.8 percent and Zuckerberg’s personal fortune lose A$8.11 billion in a matter of hours.

Apparently, No Data Was Compromised

Facebook is citing the root of the problem as a faulty configuration change that was made to the company’s systems. Santosh Janardhan, vice president of infrastructure for Facebook, explained that FB’s engineering teams learned that “configuration changes on the backbone routers that coordinate network traffic between our data centres caused issues that interrupted this communication”.

Janardhan added:

The underlying cause of this outage also impacted many of the internal tools and systems we use in our day-to-day operations, complicating our attempts to quickly diagnose and resolve the problem.

Santosh Janardhan

According to Facebook, there is no evidence that user data was compromised as a result of the downtime.

Concerns Over Control

When seeing the fury and anger that an outage of such a centralised ecosystem can cause, many start to question its value. A lot of criticism is directed at Facebook’s oversight and control.

Earlier this year, the social media giant banned Australian news sites from publishing on Facebook, and the Crypto News Australia page was not immune. The level of control centralised companies such as Facebook can have over society has heightened calls to open up the playing field for decentralised social platforms in the future.

Facebook recently announced it would be investing US$50 million in building a “responsible metaverse”. Advocates of the metaverse, which is a system of shared online spaces for games and social interaction, believe it will help change the nature of work and offer new digital economic opportunities to users across the globe.

All are not convinced of Facebook’s intentions. Many believe such announcements are simply a diversion to deflect heavy criticism about its track record on user privacy and spreading misinformation.

Decentralised Alternatives to WhatsApp

If you, like many others, rely on WhatsApp to facilitate your communication, are concerned about privacy and possibly another outage, there are decentralised alternatives to consider.  

Oxen is a comprehensive ecosystem of privacy-focused applications supported by the $OXEN cryptocurrency and backed by Australian not-for-profit Oxen Privacy Tech Foundation.

The company currently offers:

  • Session, a private messaging system; and
  • Lokinet, an anonymous internet access service.

Session is a free end-to-end encrypted anonymous messaging app that allows users to send messages securely and anonymously. The blockchain-based app is currently used by over 200,000 people in more than 200 countries and is available for both mobile (Android and iOS) and for desktop (Mac, Windows, and Linux).

Lokinet is a low-latency onion router that can be used for private browsing, voice and video calls.

Categories
Crypto News DeFi Hackers

DeFi Deja Vu: $160 Million at Risk in Another Compound Finance Bug

Compound Labs has suffered a second major blow after another bug in the system was discovered. About US$162 million is up for grabs in what is being called the “biggest-ever fund loss in a smart contract incident”.

The Hits Just Keep Coming

The hits just keep coming for popular DeFi staking protocol Compound (COMP) after what was supposed to be a routine upgrade went horribly wrong.

This is the second in just a few days to rock the protocol after a bug in COMP’s new Proposal 062 led to an over-distribution of around US$80 million worth of COMP to some of its users. Compound founder Robert Leshner asked users to give the funds back and thanked those who did.

On October 3, somebody exploited a bug in Compound’s Comptroller contract, part of the protocol that distributes yield farming rewards to users. After calling Compound’s drip () function, the attacker had transferred 202,472 COMP, worth US$68 million, from Compound’s reservoir to its Comptroller.

Since a tweet about the bug by Banteg, a core developer at Yearn.Finance, the Comptroller pool has been drained of about 64,997 COMP (US$21.5 million).

Bug Takes Seven Days to Correct

On October 1, Leshner tweeted that the amount of COMP tokens that could be accidentally distributed would be limited to 280,000 comp tokens, worth about US$92.6 million, but revealed on Sunday that more were at risk.

Leshner revealed that the Comptroller pool, already emptied once, had been replenished, thereby exposing a further 202,472.5 COMP tokens worth around US$66.9 million.

Total carnage has been avoided as the pool of cash exposed has a limited amount of tokens. The problem, however, is that the pool is replenished with cash at a rate of 0.5 comp tokens added every 15 seconds.

Leshner tweeted that when the drip () function was called on October 3, it sent a backlog of 202,472.5 COMP (about two months of COMP since the function was last called) into the protocol to distribute to users.

The community developers were hoping that Proposals 63 or 64 would go into effect before that happened, but because of the way in which Compound’s governance is structured the bug would take seven days to correct.  

Bugs, Bugs and More Bugs

For many crypto users, DeFi is becoming synonymous with bugs and hacks. Recently a bug was found on NFT marketplace OpenSea which destroyed 42 NFTs worth an estimated US$130,000. The bug was discovered when Nick Johnson, lead developer of Ethereum Name Server (ENS), tried to transfer an ENS name to one of his personal accounts, but it ended up in an unused burn address.

Earlier this month, the Avalanche blockchain also suffered its first hack. Zabu Finance, a DeFi project that runs on the chain, was exploited for US$3.3 million after a hacker identified a bug in the contract used by yield farms to distribute rewards. Zabu’s price quickly plummeted to zero.

Categories
Australia Bitcoin Crypto Exchange Crypto News Investing Tokens

Important Crypto ETF Decision Dates Coming Up in Late 2021

As worldwide interest grows in crypto, the need for exchange-traded funds (ETFs) is growing along with it. Some countries and institutions have got on board, filed, and have been approved, while the decision for others still looms.

What Is a Cryptocurrency ETF?

A crypto ETF is a fund consisting of cryptocurrencies. While most ETFs track an index or basket of assets, a crypto ETF tracks the price of one or more digital tokens. The price fluctuates daily based on investor sales and purchases, and provides many benefits to investors. These include significantly lower crypto ownership costs and outsourcing of the steep learning curve associated with trading cryptos. 

For the crypto enthusiast, ETFs are the holy grail that will boost liquidity and the adoption of cryptocurrencies for the purpose of investment.

Crypto ETFs are trading in a number of countries, but thus far US regulation has denied attempts to offer ETFs on exchanges. Many companies who have applied to the Securities and Exchange Commission are expecting to hear the outcome later this year.

ETF Timeline – Important Dates Source: Arcane Research
ETF Timeline Source: Arcane Research

Interest in ETFs is Growing

Entering the crypto market can be challenging, with concerns including price volatility, market manipulation, and lack of fundamentals to properly gauge value. ETFs offer an easier way to access the cryptosphere. Instead of trading cryptos on an exchange, ETFs trade on market exchanges such as the NASDAQ or NYSE, thereby circumventing the often daunting process of purchasing cryptos.

Crypto News Australia recently reported on a survey conducted regarding institutional interest in digital assets and crypto-based products such as ETFs across the US, Europe and Asia. It was found that over half were already invested in cryptos, while nine in 10 found crypto appealing and saw the potential upside.

Bitcoin-ETFs Rising Globally

Canada, the first country in the world to offer ETFs, launched a third Bitcoin-ETF earlier this year with the world’s lowest management fee, at only 0.4 percent per annum. Dubai has become the first city-state in the Middle East to offer ETFs and has launched a Bitcoin-ETF which is listed on the Nasdaq Dubai Exchange.

It is expected that Australia will see its first crypto ETF soon, as there is growing sentiment among millennials to retire at the age of 50 via investment in ETFs.

Earlier this year it was reported that the Australian crypto ETF could launch on the ASX in 2021. The Aussie ETF is currently delayed due to uncertainty in deciding how the arrangement with custodians will work. The Australian Securities and Investments Commission is, however, in the final stages of consultation to decide if a crypto ETF will be allowed to trade locally.

Categories
Bitcoin Coinbase Crypto Exchange Crypto News Ethereum Payments

US Workers Can Now Get Paid in Crypto Through Coinbase

Coinbase will soon offer the option of employees’ paycheques being paid directly into their accounts on the crypto exchange. Customers will be able to deposit “as much or as little” of their salary as they like when the feature rolls out in the next few weeks.

Until recently, this option had been available only to a handful of people, such as celebrity athletes and employees at crypto companies. But this is changing. On September 27, Prakash Hariramani, senior director of product at Coinbase, announced a new “get paid in crypto” service that will allow almost everyone in the US who is paid by direct deposit to receive all or part of their wages in dollars, bitcoin, ethereum or other cryptos.

Both options will be free with no service fee, but Coinbase will earn a small profit in the form of a spread for those who opt to be directly paid in crypto.

The “Future of Payroll”

Coinbase calls this new feature the “future of payroll”, and explains exactly how the service will work:

You can set up a direct deposit in just a few steps without leaving the Coinbase app. Find your current payroll company or employer and we’ll automatically update your paycheque allocation. If you’d prefer to set up a direct deposit manually, we’ll provide instructions on what to share with your HR department or employer payroll website.

Coinbase

Earn Cryptos Faster and More Efficiently

Citing “time-consuming and inconvenient” frequent transfers as part of the reason for offering this new service, Coinbase says that direct deposits will allow users a faster and more efficient way of earning crypto rewards.

Having already partnered with US-based firms such as Fortress Investment Group, Nansen, SuperRare Labs and M31 Capital to roll out direct deposits for “employees throughout the creator economy and financial services”, the exchange hopes more will come.

As you begin to do more with your crypto from staking to spending to sending, we’re also making it easier for businesses to pay their employees in crypto.

Prakash Hariramani, senior director of product, Coinbase

Last year the exchange announced that the Coinbase Card had been connected to the Visa network, allowing users to shop just as they would normally with the difference that their purchase would be funded through cryptos. The use-value of this card is still a contested subject as crypto purchases trigger tax headaches and are associated with transaction fees, in this case running at 2.75 percent.

To address these issues, Coinbase offers a reward system that pays 1 percent in BTC on each purchase and up to 4 percent back in some other cryptos.

Coinbase Abandons the Lending Ship Following SEC Threats

The move from Coinbase comes only a week after the exchange announced it would no longer be pursuing its crypto lending program, Lend. Initially intended to offer partial returns on deposits of the stablecoin USDC, the exchange has had to abandon the plan after the US Securities and Exchange Commission (SEC) threatened the company with a lawsuit. The SEC issued an immediate warning saying the product is seen as a “security”.

Users of the exchange welcome the news in light of recent issues experienced on the platform. For example, Coinbase failed during the market dip on September 7, delaying or even cancelling transactions issued during that time.

The company is also facing a class-action lawsuit relating to claims it apparently failed to disclose relevant information before being listed on the NASDAQ in April this year.

Categories
Bitcoin Crypto News Investing Tokens Trading

Office Hamster Beats the S&P 500 by Trading Crypto Tokens

Crypto trading hamster Mr Goxx has been outperforming the S&P 500 since June, using a device called the “Goxx Box” to give signals and make purchases during a live stream on Twitch to an audience that follows him.

Mr Goxx, based in Germany, has been independently trading a portfolio of cryptos that has so far seen the rodent outperform Warren Buffett’s Berkshire Hathaway, the Nasdaq 100, Bitcoin, and the S&P 500.

The S&P Dow Jones recently launched a range of new crypto-focused indices, strengthening its position in the crypto world.

Mr Goxx trades according to a system built on an infrastructure called the “Goxx Box”, which allows him to choose a cryptocurrency and send signals to traders.

How the Goxx Box Works

Mr Goxx’s human caretaker designed a system that uses a hamster “intentional” wheel to choose one of about 30 cryptos to trade, and two tubes – or “decision tunnels” – the critter crawls through to indicate whether the selected crypto should be bought or sold.

The “Goxx Box”. Source: Twitter/@Mrgoxx

Mr Goxx vs The Market

The current top cryptos held by the hamster include Tron, Ripple’s XRP, Cardano’s ADA, and Ether. Since Mr Goxx started trading in June, he has grown his portfolio nearly 24 percent. His portfolio was funded with the euro equivalent of US$390 and his anonymous caretaker and business partner has explained that the trades Mr Goxx makes are automatically set to 20 euro increments.

Since September 24, Mr Goxx has generated profits of 77 euros, and his portfolio hit a high of about US$580 in mid-September.

There are plans to give Mr Goxx more control and let him intentionally pick his ‘buy’ amount if the interest in his channel keeps growing.

Mr Goxx’s anonymous human caretaker

To get a better sense of how Mr Goxx operates, this performance review posted to YouTube should be of assistance:

It’s an Impressive Start But Be Wary

Given that Mr Goxx has only been trading since June, his performance is certainly impressive, although human traders should proceed with caution when taking investment advice and be aware that growing a crypto portfolio takes time.

In May this year, Crypto News Australia reported on one trader who has been at it for 10 years and shares the lessons he has learned along the way.

Categories
Australia Bitcoin Economics Ethereum Gold Markets Worldwide

‘Rich Dad’ Author Robert Kiyosaki Warns of Global Financial Crash Looming

Author Robert Kiyosaki has been outspoken on Twitter, expressing his take on the current economic situation, America’s leadership, and a fear that the world is headed for “the biggest crash in world history”. He urges citizens to buy Bitcoin, Ethereum, gold, and silver.

Concerns over US spending and approval of a monumental stimulus package are driving fear and uncertainty over the value of a dollar. Inflation is looming as the US continues to enter money into circulation. Bitcoin and other cryptos are gaining value, while the US Dollar (USD) continues to lose.

In a video posted to YouTube, the author of Rich Dad, Poor Dad expresses his views on the current world economy, his disapproval of US monetary policy, and the benefits of crypto.

US Dollar is Losing Its Purchasing Power – Buy Bitcoin

Since 1900, the USD has lost about 97 percent of its purchasing power. This means that whatever used to cost US$1 now costs US$31 – keep in mind that inflation affects this estimate.  

The US recently approved a stimulus package to the value of US$1.9 trillion, which suggests that the purchasing power of the USD against bitcoin may decline even further. When comparing the USD price against the Satoshi, which is 100 millionths of a bitcoin, it appears that since the inception of BTC the USD is losing up to 99 percent of its purchasing value each year. The US$1,400 stimulus cheque that the US Government is handing out to every citizen is likely to continue this trend.

Australia Is Turning to Crypto

The worrying US economic situation is being observed all over the world, and Australia is feeling it too. Many Australians are turning to crypto as wages fail to keep up with the consumer price index (CPI), the cost of living continues to increase, and job insecurity is at an all-time high.

Figures from Australian Bureau of Statistics indicate that the CPI has been rising consistently over the past 10 years.

The Australian CPI quarterly change. Source: ABS

The number of Australians turning to crypto to become financially free is on the rise, keeping pace with the demand for workers to be paid in crypto and millennials turning away from traditional avenues of investing, such as property, instead opting for crypto.

Take Note from Venezuela

Venezuela is a prime example of what happens when hyperinflation sets in. The Latin American country’s currency, the bolívar, is the world’s weakest and literally no longer worth the paper it is printed on. Creative artists have instead started turning the notes into bags and wallets, which they can sell for more than the currency is worth.

Venezuela is now ranked third in terms of bitcoin adoption and joins many Latin American countries to take the crypto route. Extremely high levels of inflation are forcing nations to turn to crypto as their native currencies continue to lose purchasing power.

Categories
Crypto Art Crypto News Gaming NFTs Solana

Real Life Meets NFTs in World’s First Virtual Blockchain Claw Machine

A new NFT-based gaming marketplace is coming to Solana as SolPugs becomes the first platform to launch a live virtual claw machine on the blockchain.

We are the first live virtual claw machine on the blockchain- the idea is that we will build a gaming arcade that will be fully integrated with the blockchain and where people can win NFTs.

SolPugs spokesperson

SolPugs, a new blockchain-based company, will bring an NFT marketplace to the Solana chain next month. The company aims to build a fully integrated gaming arcade into the blockchain that will enable users to win NFTs.

SolPugs is the latest to bring NFTs into the real world after Crypto News Australia reported in June that the Australian art scene would present physical NFT exhibitions.

South Australian digital media artist Dave Court became the first in his field to stage such an exhibition, bridging the gap between the real world and NFTs. As the NFT world continues to gain in popularity in Australia, be sure to expect more.

NFT Madness Continues

As the NFT market continues to explode, there are no signs of it slowing down any time soon. In addition to its virtual claw machine, SolPugs will also launch its own NFT.

The company will be offering 5,000 uniquely generated pugs, each with more than 70 distinctive attributes, to be made exclusively for the Solana blockchain and SolPugs’ NFT Gaming Marketplace. Each pug is drawn by hand by an in-house digital artist.

Our system algorithm is designed to generate a unique pug with every minting session. This way, each of our pugs is unique in its own way and you will never find two identical pugs with us. So you will have 5,000 randomly generated Sol Pugs here with 70-plus different attributes to choose from. It’s going to be a unique experience for our users. 

SolPlugs spokesperson

The company also has a whitelist that people can win, either through its whitelist competition or by playing on SolPugs’ virtual claw machine. Pugs come in five different rarities, ranging from Common to Legendary. When a member mints a pug, it will be assigned a rarity.

After the launch, SolPugs will list the pugs on all major NFT marketplaces, including Solanaart.io, Solsea.io, and Digitaleyes.market.

Aiming to bring utility to its pugs, the company will allow members who hold pugs to post their NFTs in their marketplace. People can then win the NFTs, allowing the seller to reap the rewards.

SolPugs Joins Others in the Digital Arcade Game

SolPugs will join Decentraland in hosting a digital arcade claw machine. Decentraland allows users to play the claw machine by paying a set amount of Mana, after which they can win NFTs such as Crypto Kitties and Axies.  

The below video posted on YouTube explains the digital arcade claw on Decentraland:

Atari Hotels recently announced that it intends to accept its own Atari Token (ATRI) for use on its premises. Although it’s still unclear exactly what they will be used for, they may take the form of digital arcade tokens that allow users to play their favourite games in the Atari gaming playgrounds.

Categories
Bitcoin Crypto News

SkyBridge Capital Fund Rumoured to Own $700 Million in Crypto

Anthony Scaramucci, CEO of alternative investment firm SkyBridge Capital, has revealed that the fund now holds US$700 million in cryptocurrency. The firm has filed for a crypto-focused exchange-traded fund (ETF) and has revealed plans for an Algorand fund.

This is a technology and a product of the future, and the future is going to come more quickly than people expect.

Anthony Scaramucci, CEO, Skybridge Capital

A long-time believer in Bitcoin, Scaramucci launched SkyBridge Capital’s first BTC fund last year with a US$25 million investment.

With a US$700 million investment in Bitcoin and Ethereum spread across all SkyBridge products, Scaramucci is convinced that BTC is growing faster than tech giants Google, Amazon and Facebook, and will reach one billion users by 2025.

Scaramucci, a former White House communications director, says the firm has raised more than US$100 million toward its newly announced Algorand fund. He adds that “cryptos are here to stay”, noting that regulators must “act very quickly” if they are to stem the snowballing adoption of cryptos.

A Change is Gonna Come

Scaramucci is of the opinion that cryptos are here to stay and will revolutionise the finance world as Amazon and Facebook did for the internet and e-commerce. Bitcoin and crypto in general will represent a breakaway from an “old economy” that will survive and co-exist in the future, he says.

My eureka! moment was when I recognised that the blockchain is allowing us to transact with each other without a third party, without an authority.

Anthony Scaramucci

Bitcoin ‘Will Reach $100,000’ Before End of 2021

“As long as I see that, I see those prices rising,” Scaramucci says. “So we’re going to stick with the US$100,000 price target.”

Scaramucci’s prediction is based on BTC’s limited and fixed supply coupled with exponentially bigger demand each month. The fund manager adds that for SkyBridge Capital, BTC is not a trade but rather a long-term investment and store of value.

Bitcoin Can No Longer Be Ignored

Demand for BTC is on the rise, and financial institutions can no longer ignore it. Banks and financial institutions are slowly accepting this inevitability, albeit with some trepidation.

Morgan Stanley now offers three bitcoin funds to its wealthiest investors but due to the inherent volatility of BTC currently allows clients to invest only 2.5 percent of their capital in bitcoin, citing it as a risky investment. The bank has also recently filed with the US Securities and Exchange Commission (SEC) to allow bitcoin exposure into multiple funds.

Categories
Bitcoin Cardano Crypto News Ethereum Markets Ripple Solana Trading

$2.5 Billion Longs Liquidated As Crypto Market Sees Sudden Drop

Over the past two days, more than US$2.5 billion longs have been liquidated as the crypto market sees yet another drop.

Traders woke up to a rough Monday as the crypto market saw up to double-digit percentage losses across the board. The sudden drop saw Solana, Cardano and Ripple (XRP) drop millions from their market caps, and Bitcoin (BTC) and Ethereum (ETH) plunge 10.4 and 14.7 percent respectively over the past seven days, according to data from CoinGecko.

More than $1B got liquidated in this 24 hours, therefore making total liquidation in 2 days more than $2.5B! from CryptoCurrency

What are Liquidations?

Liquidations occur when traders borrow excess capital from exchanges or brokerages to place bigger bets on the assets they trade, known as margin trading or trading futures.

Traders pay a fixed fee for borrowing while exchanges close out these positions at a predetermined price. If a trader’s collateral is equal to the loss on that position, a trade then becomes ‘liquidated’.

Of all the traders liquidated in the past few days, a shocking 91 percent of them were in the ‘long’ market. Being in the long market means traders had put on positions betting on higher asset prices.

According to data from Bybt, 136,690 traders were liquidated in the past 24 hours, while the total value of liquidations during that period reached over US$635 million.

Total liquidations observed. Source: Bybt

Investors REKT

Liquidations of US$236 million BTC and US$216 million ETH were recorded, while large-cap altcoins such as Solana (SOL) and XRP saw liquidations worth US$26 million and US$17 million respectively in that 24-hour period.

The largest single liquidation order took place on Bitfinex-ETH, to the value of US$14.52 million.

The dip has investors confused and fuming as the market drop comes only days after BTC had reached a “Golden Cross”. One Reddit user aptly described his dismay at the situation:

Today’s dip is proof that TA is useless. “Golden Cross” my ass from CryptoCurrency

The golden cross is a chart pattern that is generally seen as an indicator of bullish price action to come, but this is not always the case. Given the market is more mature, diminishing returns ought to be expected.

Investors should approach with caution, and not rely on a single indicator to guide them. Many factors influence the price, none of which is predictable.

Just a ‘Bit’ Too Soon

September is proving itself to be a worthy opponent to those finding their way in the crypto market.

Investors are still reeling from the previous round of liquidations on September 7, in which over US$3.7 billion worth of cryptos were liquidated after BTC and other major altcoins tanked.

During that period, a total of 375,824 traders were forced out of the market after becoming overleveraged as sudden crypto price drops were experienced.