The price of the flagship cryptocurrency Bitcoin ($BTC) has seen an unexpected and brief surge on Bitfinex’s perpetual swaps, after its price rose to $56,000, significantly surpassing levels seen on other platforms and Bitfinex’s exchange just moments before and after the event.
A sudden increase in trading volume accompanied the price spike. When it occurred on Bitfinex’s BTC perpetual contracts, trading volume rose to 322 BTC, or $9.1 million, accounting for around a quarter of the daily volume on the trading pair. The flash rally resulted in the liquidation of some traders’ positions, as per data from Bitfinex’s trading platform.
The sharp price increase, as CoinDesk reports, coincided with a 2.5% surge in Bitcoin on spot markets. The perpetual contract on Bitfinex currently has a 10% market depth of 110 BTC. This indicates that an order to buy 110 BTC would shift the price on that specific market by 10%, suggesting that liquidity on Bitfinex remains low.
Paolo Ardoino, the chief technology officer at Bitfinex, addressed the situation on Twitter, stating that there was “low liquidity at that moment in time,” but added that the “system worked as expected” and the matching engine handled orders correctly.
Responding to a user, Ardoino noted that short sellers are only liquidated if there are changes in the contract’s mark price, which he said is “taken from multiple exchanges to avoid manipulation.” Nevertheless, market data on Bitfinex shows there were liquidiations at the time of the flash rally.
Despite the flash rally, various analyst are bullish on the flagship cryptocurrency. As CryptoGlobe reported Arthur Hayes, Co-Founder and former CEO of crypto derivatives exchange BitMEX, has reaffirmed he believes that the price of the flagship cryptocurrency will skyrocket to over $1 million.
Late last month it was revealed that the small kingdom of Butan, known for measuring Gross National Happiness, has been running a thriving Bitcoin mining operation.
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