Bitcoin and crypto money market experienced the day known as ‘Black Thursday’ on 12-13 March 2020. Bitcoin price declined from $ 7,000 to $ 3,600 in a time frame like an hour, marking one of the most drastic drops in history.
Bitcoin’s loss of 50% in one day is something that has not happened since 2013. A whole year has passed since that day, which coincided with a Thursday night and therefore known as “Black Thursday”.
700 million dollars in a few minutes
The World Health Organization announced on March 11, 2020 that Covid-19 is a pandemic. The S & P500 Index fell 10% a day after it. Bitcoin price, which declined with the global markets, started to crash severely with the developments in the derivatives market.
A position worth $ 702 million was liquidated at BitMEX within 15 minutes. The amount of liquidation on the stock exchange has not been that high since November 14, 2018.
According to some analysis, the price of Bitcoin fell due to the “avalanche effect” in the derivatives market.
$ 1 billion in a few hours
BitMEX users can use $ 1 Bitcoin as a base with leverage of up to 100 times and gain $ 100 in purchasing power. Twin Lakes Trading analyst Geoff Watts said that leveraged trading, whose number had increased at that time, could “lead to extreme corrections during periods of high volatility”.
Bitcoin price, which declined with the effect of Covid-19, led to the liquidation of positions one after another. The scissors between BitMEX and Coinbase has gone up to $ 500 in places. According to the analysis of Multicoin Capital, liquidity providers did not take action to stop the rapidly proliferating liquidations.
According to Coinbase’s analysis, traders, who normally take advantage of the decline, have started to sell, not buy, with the effect of the panic in the global markets. Failure to brake the fall resulted in more positions being closed. As the name implies, the avalanche effect.
The total value of long positions affected by this avalanche has exceeded $ 1 billion. In an image shared by I am Nomad, a single trader lost 1,200 BTC.
BitMEX decided to halt transactions
As this avalanche was growing, BitMEX executives announced that a DDoS attack was carried out at around 05:00 in the morning and put the exchange into maintenance mode. BTC, which had dropped to $ 3,600 before this decision, rose to over $ 5,000 after the transactions on BitMEX stopped.
According to the Multicoin Capital report, BitMEX’s order book had a bid of $ 20-25 million at one point.
In other words, the only thing preventing Bitcoin’s price on BitMEX from going to zero was the $ 20 million transaction orders.
There are those who think that BitMEX’s DDoS attack disclosure is a cover to stop transactions. According to FTX CEO Sam Bankman-Fried, stock exchange managers may have realized that “there is too much leveraged position, there is neither liquidity nor a premium broker to come into play” and decided to stop the transactions.
What happened after a year?
BitMEX, which lost most of its users due to the incident in March 2020, faced the shock of the lawsuit in October 2020. The stock market’s Bitcoin reserve has shrunk by 60% until January 2021 due to these two consecutive events.
In contrast, the Bitcoin price has grown exponentially. The proliferation of individual and especially institutional investors raised the price up to $ 56,830. Bitcoin gained 1.478% a full year after Black Thursday.