BitMex Founder Sees Carnage If Bitcoin, Ethereum Breach These Levels

Ambar Warrick
June 14, 2022
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Bitcoin bottom

BitMex founder Arthur Hayes said the Bitcoin and Ethereum could be primed for severe losses if they dropped below a certain level.

For Bitcoin, Hayes sees a drop below $20,000 causing a spot-selling cascade. He sees a similar scenario playing out for Ethereum if it falls below $1,000. Hayes says that open interest and positioning in the options market is driving his prediction.

Bitcoin is currently trading around $22,000, while Ethereum is just above $1,200. Both tokens have capitulated heavily in the past 24 hours, and likely face further weakness.

Concerns over a Federal Reserve rate hike this week, rising inflation and potential chaos in the options market have driven the recent crypto rout.

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Why are $20K and $1K crucial for Bitcoin and Ethereum?

In a Twitter thread, Hayes said that if Bitcoin and Ethereum were to breach the levels, it would place “massive sell pressure” in the spot markets, due to dealers having to post more collateral to maintain their positions.

But the ones that won’t be able to successfully cover their positions will be forced to sell, creating even more sell-side pressure on the two tokens.

Hayes warned that breaking below the levels could cause an unprecedented amount of selling in the market.

As far as the charts go, you better get out your Lord Satoshi prayer book, and hope the lord shows kindness on the soul of the #crypto markets. Bc if these levels break, you might as well shut down your computer bc your charts will be useless for a while.

-Arthur Hayes

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Liquidation risks aplenty

With the recent, sharp drop in Bitcoin and Ethereum prices, several major position holders are at risk of being liquidated. The most prolific of these is embattled lender Celsius, which faces a $522 million liquidation of its Bitcoin position.

Michael Saylor’s MicroStrategy also faces a similar position, although its liquidation could be in the billions. While Saylor said that Bitcoin prices would need to hit around $3000 for such a scenario, critics argue that the actual price may be higher.

Any such major liquidation would cause a sharp decline in crypto prices.

MicroStrategy, which has the highest Bitcoin holdings among any publicly listed firm, is currently holding the token at a near $1 billion unrealized loss. 

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.