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The Founder of BitMex foresees chaos if Bitcoin and Ethereum breach price level

Bitcoin and Ethereum, according to BitMex founder Arthur Hayes, could face severe losses if they fall below a certain level.
Hayes sees a drop below R322 276 in Bitcoin triggering a spot-selling cascade. If Ethereum falls below R16 114, he sees a similar scenario unfolding. Hayes bases his prediction on open interest and position in the options market.

Bitcoin is currently worth around R354 504, while Ethereum is worth slightly more than R19 337. Both tokens have capitulated significantly in the last 24 hours and are likely to fall further.

The recent crypto rout has been fueled by fears of a Federal Reserve rate hike this week, rising inflation, and potential chaos in the options market.

Why are R322 276 and R16 114 so important for Bitcoin and Ethereum?

Hayes stated in a Twitter thread that if Bitcoin and Ethereum breach the levels, it would cause “massive sell pressure” in the spot markets because dealers would have to post more collateral to maintain their positions.

Those who are unable to successfully cover their positions will be forced to sell, adding to the sell-side pressure on the two tokens.

Hayes warned that a break below the levels could result in unprecedented market selling.

As for the charts, you should pull out your Lord Satoshi prayer book and pray that the Lord shows mercy on the soul of the #crypto markets. Because of these levels fail, you should probably shut down your computer because your charts will be useless for a while.

-Hayes, Arthur

There are numerous liquidation risks

With the recent sharp drop in Bitcoin and Ethereum prices, several large position holders face liquidation. The most prolific of these is embattled lender Celsius, which faces a R8 billion Bitcoin liquidation.

Michael Saylor’s MicroStrategy is in a similar situation, though its liquidation could be in the billions of dollars. While Saylor stated that Bitcoin prices would need to reach around R48 305 for such a scenario to occur, critics argue that the actual price may be higher.

Any major liquidation would result in a sharp drop in cryptocurrency prices.

MicroStrategy, which has the most Bitcoin holdings of any publicly traded company, is currently holding the token at a loss of nearly R16 billion.

The Founder of BitMex foresees chaos if Bitcoin and Ethereum breach price level

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at [email protected]

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