Alex Dovbnya
The price of bitcoin on Bitfinex perpetual swap market briefly surged to $56,000, fueled by high trading volume and lack of liquidity
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Bitcoin’s price on Bitfinex’s perpetual swap market briefly surged above $56,000 today, sending shockwaves across the crypto market.
Trading volume on Bitfinex’s BTC PERP market surged to 322 BTC ($9.1 million) for two minutes, accounting for about 25% of the trading pair’s daily volume.
In response to the sudden price surge, Bitfinex CTO Paolo Ardoino explained that the low liquidity at the time was the cause.
He also assured market participants that the system worked as expected and the matching engine processed all orders correctly.
Perpetual swaps, like the BTC PERP market on Bitfinex, are a type of derivative contract that allow traders to speculate on the future price of an asset like Bitcoin with no expiry date.
These contracts allow for both long and short positions, allowing traders to take advantage of price rises and falls. Funding rates are used to keep the perpetual swap price close to the underlying asset. Traders holding a position towards the funding rate pay the opposing traders, stimulating the market to stay balanced.
Meanwhile, Bitcoin’s overall market price has also skyrocketed, hitting an intraday high of $28,764 on the Bitstamp exchange today.
The recent decline in embattled US regional bank stocks appears to have helped Bitcoin’s recovery.
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