OKEx liquidation and ETH/USD Bitmex

🚨OKEx liquidation and ETH/USD Bitmex🚨

An important situation is unfolding at OKEx, one of the top crypto exchanges in terms of daily volume. The number one contract holder at OKEx had accumulated a $460 million long position before he was liquidated 📉on July 31st. While this is astonishing in its own right being such a massive position to be liquidated, the main issue with the current situation is that that the liquidation did not get filled in the market. There is now a $420 million overhang waiting to be filled just above $8000.

OKEx will be coming out with their decision on how to handle the recent liquidation at 4:00pm Hong Kong time tomorrow. ⏳

Currently OKEx has 10 btc in their insurance fund, which is used to reconcile situations like the current one. Unfortunately the liquidation has resulted in a 950 btc loss. Since their insurance fund clearly doesn’t cover the loss, OKEx will have to make a decision on how to reconcile the liquidation sitting on their books.

If BTC’s price can’t climb back above 8k to fill the liquidations, then the massive wall will have to be dealt with by using a clawback. A clawback would entail that shorters have to use their profits to pay for the liquidation. This likely outcomes that will occur if a clawback takes place are: OKEx users will become extremely disgruntled 😪and move to different trading platforms and shorters will close their positions as they do not want to be held responsible for the payback procedure.

This is yet another interesting development in the crypto space. We are not sure as of this point what effect it will have on the market if any but will be awaiting announcement from the OKEx team.👍