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Bitcoin Shorts Unethically Cut on Binance Futures, Claims Trader

Several crypto traders recently claimed on Twitter that their Bitcoin shorts were deceitfully cut on Binance Futures. As the Bitcoin price suddenly fell from nine thousand five hundred USD to eighty-one hundred USD, a couple of Binance traders asserted that their successful short trades were fraudulently cut short.

On 10th May 10, a trader named AthenaBank wrote,

“Deleverage? Binance close my short after I make 7 times my investment. What’s going on? Where is my short? The BTC dropped to $8,000. Who pays the difference?”

It is to be noted that traders use leverage or debt for trading with bigger capital, in the futures market. For instance, crypto exchange Binance allows a trader to use one hundred and twenty-five times of their original principal. This means that if a user has thousand USD, he can trade with up to one hundred and twenty-five thousand USD.

A problem arises when the BTC price witnesses an unexpected upsurge or decline in price. More traders try to short Bitcoin, during this period. As the price drops speedily, it generates a disparity in the orderbook. When there is a large orderbook discrepancy, it can possibly lead to a spurt of liquidations and cause the price of BTC to drop to irregular prices. For preventing this only, auto-deleveraging is used by exchanges.

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