On Binance, bitcoin quarterly futures hit a high just shy of $100,000 – $99,964. While sudden moves like these aren’t new, it had been forgotten due to the slow, sideways moving price devoid of volatility.
With over a billion dollars worth of positions liquidated in a minor $1,400 move by Bitcoin, volatility is back. While the move might be over for now, more might be on its way. At press time, bitcoin was trading at $11,300 and had a market cap of $208 billion; but while this drop took place some exchanges, especially Binance went a little haywire.
From the above, it can be seen that the quarterly futures, which is still open hit a high of $99,964; the reason for this was automatic trading or trading using bots and algos. On the exchange, slippage seems to have played a major role in this weird turn of events.
The wick had a total volume of $2.5 million as of writing, however, more will accrue as the wick gets erased and charts are rewritten by Binance. CZ, the CEO, and co-founder of Binance had tweeted,
“Another day in crypto. We do have price band protection, but a user’s algo went ballistic and sent multiple orders to achieve this. We will likely have to adjust this chart a bit so that it’s readable in the future.”
While this wick did not technically cause any issues like auto-deleveraging [ADL] for bitcoin futures, it did so, for ethereum and other altcoins. XRP and TRX perpetual contacts also suffered wicks that dipped as low as 22% and 7%, respectively.
This slippage does cause a lot of trades to get auto-deleveraged, while ADL is put in place to prevent liquidations and help new users, it also prevents users from keeping their trades open.
The #Binance Futures Insurance Fund has used over $6,000,000+ in the past 24 hours reducing ADL’s.
In the event that the insurance fund continues to deplete, we will inject new funds and continue protecting our users.
Sign up to #BinanceFutures here:
➡️ https://t.co/jkiHuCnnVe pic.twitter.com/ISzDtahFGx
— Binance (@binance) March 13, 2020
The drop seen today wasn’t the biggest drop, however, a similar ADL scenario took place in March when BTC dropped 50% in a few hours. Binance tweeted that “Binance Futures Insurance Fund used over $6,000,000+ in the past 24 hours reducing ADL’s”. They also made sure to mention that should the fund deplete, more would be injected to make sure users are protected.