Market Wrap: Bitcoin Tests $12K; DeFi Debt Outstanding Hits Record

Bitcoin hit $12,000 but then fell as long derivatives traders were wiped out. Meanwhile, DeFi lending continues to grow.

  • Bitcoin (BTC) trading around $11,884 as of 20:00 UTC (4 p.m. ET). Gaining 1.8% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $11,468-$12,084
  • BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

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Bitcoin trading on Coinbase since Aug. 8.
Source: TradingView

Bitcoin was able to hit as high as $12,084 on spot exchanges such as Coinbase only to quickly drop 4.5% a few hours later. Leverage may have played a large part in its initial runup and the sudden move down after, according to Denis Vinokourov, head of research for Bequant, a London-based digital assets prime broker.

Read More: Bitcoin Suddenly Drops by $500 After Passing $12K

Indeed, leveraged bitcoin traders on derivatives exchange BitMEX were wiped out on the price ride up and back down. As bitcoin’s price increased, short-positioned traders lost over $2.5 million, the crypto equivalent of a margin call. Then, when the bitcoin price decreased, long-positioned traders lost over $8.4 million.

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BitMEX liquidations the past 24 hours.
Source: Skew

Vinokourov expects more short-term action in the derivatives market to affect bitcoin’s price. That’s because of very low perpetual rates charged to leverage on derivatives platforms such as BitMEX. “With perpetual rates that are flat to slightly positive, leverage flow will likely try its luck again and look to squeeze into the mid-$12,500 zone,” Vinokourov told CoinDesk.

Aaron Suduiko, head of research liquidity provider SFOX, says market volatility is increasing but the way it has been doing so may be a bullish sign.

Read More: Bitcoin Hits $12K as Trump Orders Checks for Unemployed (Voters)

“What we’ve seen since the late-July rally are BTC/USD (U.S. dollar) price increases, followed by smaller, relatively quick drops. One pattern with which that’s historically been consistent is…

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