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Steep Bitcoin Decline Wipes Out Big Trader, Starbuck Says Yes to Crypto

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Yaron Mazor
Bitcoin continues to face resistance at $6,600, with another breakout this morning short lived. It could be another day in the ranges…
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‘Whale’ gets Harpooned as Bitcoin Suffers Steep Decline

A huge and wrong bet on Bitcoin made on July the 31st by a large cryptocurrency trader on the Hong Kong-headquartered OKEx exchange has created a firestorm of news the past few days.

While exact details are unknown, it is clear the trader took out a massive ‘futures’ buying position using leverage and the price of Bitcoin soon came under pressure.

The negative price action of Bitcoin effectively buried the speculator’s long position and he could not cover his losses.

This put traders on the opposite side of the ‘futures’ contracts via shorts (selling positions), who believed they had made significant gains, unfortunately at the mercy of the OKEx exchange which faced a liquidity crisis. OKEx this weekend implemented its ‘clawback’ clause within its Terms and Conditions.

Traders involved in the trade and who were on the correct side of the trade with selling positions – appear to have been forced to give back 18% of their winnings.

Thus, those holding short positions who thought they would be making a massive amount of money on the virtual ‘futures’ contracts apparently will not be walking off with as much profit as they thought.

OKEx according to statistics is well within the top ten ranked global cryptocurrency exchanges in terms of volume.

What isn’t clear is how OKEx handled the mechanics of the trade when things started to go wrong and against the trader. However, it is obvious when Bitcoin came under massive pressure on Friday, the trader was not able to meet obligations and was completely wiped out from the long position.

Further news from this event will certainly emerge as traders and government regulators continue to ask questions.

Broad Market Oversight

Bitcoin has tumbled the past few days and is trading around 7070.00 USD level as per the writing of this report.

The price of Bitcoin has dropped in value over 10% the past week and its volatility has been quite evident.

Sentiment in the broad digital asset marketplace may be facing headwinds created from the fallout of news regarding the OKEx platform and the large trader who took a massive loss on Friday.

Many of the major cryptocurrencies are trading near important support levels last experienced in April.

And this coming week’s price action will certainly get the attention of the cryptocurrency community and the financial institutions audience who try to anticipate digital assets next move.

A Cup of Joe for your Bitcoin

Even as cryptocurrency prices remain under pressure, the market is not enveloped by a total dark cloud as the week begins.

Your morning cup of coffee may become a key component of the cryptocurrency world.

This is because Starbucks has said publicly they will allow for an infrastructure to be developed and used within the company that will allow its clients to use some cryptocurrencies when they are purchasing their coffee.

Starbucks will use a technology developed in conjunction with Bakkt and Microsoft. There has been no exact date given regarding when Starbuck’s consumers will be able to use their cryptocurrency to purchase at their shops, but the acknowledgment from Starbuck’s has certainly sparked interest and may spur on other large retailers to enter the cryptocurrency sphere.

The newly created Bakkt Company says it will eventually allow retailers to be able to exchange cryptocurrency back into fiat currency through a regulated infrastructure which will use Microsoft cloud applications.

Starbucks has been a noted participant in the digital payments sector for a handful of years via its mobile Starbucks app which is used widely in the United States by its consumers.

Yaron Mazor is a senior analyst at SuperTraderTV.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.

This article was originally posted on FX Empire

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