Yesterday, a friend asked, what would happen at Binance if the Upbit incident occurred?
If the Upbit incident happened at Binance, it would trigger a complete black swan event, but the probability of such an event occurring due to the depth of Binance's liquidity pool is very low.
In terms of price and sentiment, yesterday the big players were quite anxious, and they should reduce leverage going forward.
The speed at which Bitcoin recovered yesterday proves that the big players are very afraid of risk events causing market sentiment to spiral out of control and lead to a chain sell-off. Typically, when market sentiment events are triggered, a large-scale liquidation occurs, which includes many institutional hedges also being liquidated.
The speed of Bitcoin's recovery can also be understood; I mentioned yesterday that Upbit's individual trading system would not have a deep impact on the market. The core reason is that the big players will quickly correct market sentiment and reduce leverage to avoid serious harm from risk events.
As for future trends, it depends on whether South Korea and the majority believe there is risk in the market.
However, this incident serves as a reminder that the crypto market is still fragile, and most people will likely choose to reduce their leverage.
Currently, the liquidity pool in the Bitcoin market is also not deep enough, and there are indeed conditions that could trigger risks. Regarding who won or lost yesterday, it is certain that the long positions had to put in more capital than the short positions to maintain market sentiment stability.
Those who reduced their holdings yesterday need not regret; a gentleman does not stand under a dangerous wall. While the long positions are maintaining market sentiment, they have also laid a trap at this position. Under normal circumstances, a pullback phenomenon will occur within 3 to 4 weeks, usually within three weeks.
Maintaining stability generally requires a large amount of capital, and the stock market is the same.
