Dark night for Bitcoin: Binance hack liquidates $1.5 billion

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Three threads cross today: the purge of longs, the monthly expiration of options at 9 a.m., and a Standard Chartered strategist who does not yet see the bottom.

Everything happened between 11 p.m. and 2 a.m. While on-chain analysts counted the billions taken out of Binance wallets, bitcoin fell from 80,000 to less than 77,000 dollars, with a brief passage towards 76,000 dollars according to CoinDesk. Ether followed below $2,215, while BNB lost more than 8%.

The bill for leveraged traders is heavy. More than $1.5 billion in positions were liquidated in 24 hours, including $468 million on bitcoin and $358 million on ether, and long positions (upward bets) account for almost the entire breakage. In effect, the derivatives market amplifies every move, because a forcefully closed position sells to the market and pushes the price towards the next liquidation.

The 6 o'clock rebound has something mechanical about it. Once the longs are cleaned out, there is no one left to liquidate, and the short sellers buy back. However, nothing says that the movement will hold.

The calendar doesn't help. This Friday at 9 a.m. (8 a.m. UTC), Deribit is expiring approximately 135,000 Bitcoin options contracts for a notional amount of $10.92 billion. This represents almost 35% of its open interest, according to Deribit data relayed by KuCoin. An option is a right to buy (call) or sell (put) at a fixed price. The “max pain,” the level where the greatest number of options expire worthless, is at $78,000. Furthermore, the put/call ratio of 0.53 indicates that call buyers still dominated this week. Many will therefore leave empty-handed.

On the ether side, $776 million worth of options expire at the same time, with a max bread at $2,500. However, the price is 250 dollars below.

ETFs tell a calmer story. US spot Bitcoin funds saw $17 million in net inflows on October 29. On the other hand, Ethereum funds lost 105 million, the fourth outing session in a row. Finally, the session on October 30 will tell if institutional investors took advantage of the night to buy or if they left.

Machine-translated from French