A small Bitcoin sell order placed on Binance leading to an unexpected price drop of circa $100, what happened?
A small Bitcoin sell order placed on Binance did not gain favorable bids from buyers, resulting in an unexpected price drop of about $ 100. The first person to record the event was Hsaka, a famous cryptocurrency analyst. According to him, traders opened an order to sell 300 BTC on the Malta cryptocurrency exchange at around 11:05 UTC. But the position didn’t close at the Ask rate. It put the seller (s) under risk of closing the order at a lesser price.
Nice 100 $BTC market sell on nance. pic.twitter.com/EzVDuai3cV
— Hsaka (@HsakaTrades) March 2, 2020
A 300 Bitcoin sell-order on Binance drops the price by $ 100
Liquidity belongs to the ease with which traders can buy or sell bitcoin (or any asset) at the desired rate. The higher the comfort, the better the liquidity. That said, traders can enter and exit positions smoothly because someone is always available at the other end to match their order.
But that is not the case with Bitcoin. This is still an asset with low liquidity problems. And there is a big difference between the bid and the Bitcoin price on a cryptocurrency exchange that has been up to 2,271% in the past seven days.
Bitcoin’s Bid-Ask spread across the leading crypto exchanges | Source: Bitcoinity
Combining liquidity issues with Bitcoin’s increasing volatility over the long term indicates that cryptocurrencies are an immature asset. On the other hand, improving bid/demand spreads across all exchanges can lead to growth. Unfortunately, that is not the case today with Binance.
Nice 100 $BTC market sell on nance. pic.twitter.com/EzVDuai3cV
— Hsaka (@HsakaTrades) March 2, 2020
Traders eventually matched a dwarfed bidding rate to attract potential buyers, resulting in a price reduction of about $ 100 at the time of execution. The move seems too unusual for viewers, including Hsaka, who blames Binance’s liquidity for the decline in cryptocurrencies.
Only 100 btc to do that lol
— XC (@runtheirstops) March 2, 2020
The market quickly absorbed the loss
Bitcoin’s $ 100 drop has dropped by 1.21%. But the market soon absorbed losses, resulting in a steady retreat above $ 8,800 after the European midday session.
The dump and pump partly show the traders’ tendency to protect the support near $ 8,600. Their buying sentiment skyrocketed around the said level, suggesting that a sustained price upside target lies near or above the $ 9,000 level.
Bitcoin closes above 200-DMA in a rebound action | Source: TradingView.com, Binance
Most importantly, the price drop helped push prices past the critical resistance defined by the 200-day moving average of Bitcoin (the fuzzy wave in the chart above). Renowned market analyst Scott Melker has called it a healthy recovery.
Nice 100 $BTC market sell on nance. pic.twitter.com/EzVDuai3cV
— Hsaka (@HsakaTrades) March 2, 2020
In short, the Bitcoin market continues to advance but suffers from low liquidity risk on Binance.
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