This week in crypto has been one of the most eventful so far in 2019, as rumors of HitBTC’s potential insolvency begin to spread, Binance confirms a move into margin trading, and Bitcoin bulls turn it up yet again with another huge pump.
Binance Confirms Margin Trading Rumors
A few weeks ago, it was leaked that Binance was preparing to launch a margin trading feature by a programmer who incidentally came across the suspicious code in the platform’s back end API. This news was further confirmed last week, and again by accident, as the company took to Twitter to promote its optional light and dark modes, asking its community which of the displays they preferred.
The screenshots used to show off the platform’s UI clearly displayed a new tab titled “Margin”, supported by yellow bolded text sitting beneath the tab that read “Important Reminder” with supporting smaller text explaining that while margin trading carries a “higher potential profit,” it comes with “greater risks.” Shortly after this post went out and the detail was picked up by Twitter fans, a Binance representative confirmed that margin trading will be available on the Binance exchange “soon”.
Although Binance is not the first crypto exchange to feature margin trading, the giant’s decision to add the advanced strategy signifies the demand by crypto traders to use leverage in today’s evolving market.
Already, Kraken, OkEX, Bitfinex, and Poloniex offer modest amounts of leverage of up to 5x max. Tellingly, the two leading margin trading platforms, PrimeXBT and Bitmex (offering up to 100x leverage), have both hit records highs in trading volume and new user numbers within the last month – exposing a trend that traders are opting for higher risk/reward strategies in general.
Exactly how much leverage Binance will be offering is yet to be confirmed, or leaked for that matter.
11% Bitcoin Pump Kills $130 million Shorts in 4 hours
At around 7pm UTC time on Sunday, Bitcoin’s price pumped over $500 in just under 2 hours, from around $8,030 up to $8,590. Since then Bitcoin has continued to climb higher, gaining another $280 to reach $8,883 before pulling back to close out a 10.6% total increase.
The Cryptocurrency market at-large has followed suit, with a rise of 9.9% across the board, and with 88% of all assets in the top 100 also seeing gains over the past 24 hours.
Bitcoin bears have been utterly crushed during the upwards move, with over $130 million worth of shorts being liquidated on Bitmex. Meanwhile, PrimeXBT has seen a dramatic surge in trading volume over the past weeks, with 24-hour volume now reaching over $500,000,000. This comes at a point where a distinct lack of resistance above the $8,500 mark is leading many to predict that $10,000 will be tested in the short term.
Bitcoin Mining Hash Rate Reapproaching All-Time High
Coinciding with a 172% increase in the price of Bitcoin since a bottom of $3208 in Mid-December, the Bitcoin mining hash rate has progressively increased throughout 2019, with a new all-time high now approaching.
Miners have been re-entering the market since a hash rate low point of 33.7 EH/s on the 12th December. The influx of hashing power was seen by many as the signal for a long-awaited reverse of the Bitcoin price trend, with the Bitcoin price low almost mirroring the reversion of the downwards Bitcoin hash rate trend.
According to Tradeblock, the current hash rate sits at 55 EH/s, with September’s all-time high of 58 EH/s edging closer over the past days and weeks.
The ongoing resurgence in hash rate is an encouraging sign for cryptoasset markets and contrasts starkly against the collapse of the mining industry seen throughout 2018, where dwindling profits led to reports of miners scrapping mining equipment en masse.
HitBTC Under Fire
Over the last week, HitBTC has raised serious cause for concern among the crypto community with regards to the state of the company’s liquidity and financial reserves. It seems the figures are not adding up, as Coinfirm claims the exchange has roughly $3 million in reserves, which is much less than what you would expect such a large exchange to facilitate so much trading activity.
To add fuel to the fire, several people have taken to social media having reportedly faced major obstacles when trying to withdraw their funds with strict KYC/AML procedures, which has led to further questioning of whether the company is insolvent.
Yesterday, a board member from HitBTC, Joan Gald, hit back to explain the situation, stating “Obviously, a subset of hot wallets’ balances are not representative of exchange’s total assets,” she said further, “someone has been motivated to openly harm our reputation”.
With respect to the KYC/AML withdrawal complaints, Gald explains that the gossip posts were based on only 3 AML cases and “all quoted AML cases were resolved within 3, 12 and 33 days respectively”.
It remains to be seen whether this is the beginning of a bull run that will continue throughout 2019, or whether resistance at $10,000 will cool the current upward trend.
The resurgence of profitable mining is a positive indicator for market health as we move towards truly optimistic sentiment once again, and potentially surpass the all-time highs created in the previous bull run.
What is clear is that cryptocurrency markets and the platforms that prop them up are changing rapidly, and that once-untouchable institutions of the industry are now having to adapt to the times, or are collapsing under the weight of newer, better trading platforms.