If you're into blockchain technology in general, there's a great podcast by Laura Shin called Unchained.
The recent episode covers what's now called Black Thursday in crypto markets, or the day everything fell like crazy. Being able to pinpoint why there was a selloff (beyond covid-19) is always difficult, but with crypto there's always the technology layer that tells us so much of what was going on.
Here's a timeline of what happened March 12th:
- Crypto markets fall sharply at first as everyone sells off from Corona panic.
- A second sell-off is triggered by lenders liquidating their crypto collateral.
When the market moves more than 30% in a day, even traders with relatively mild amounts of leverage start getting liquidated. As spot prices fell as a result of collateral liquidations, derivatives followed. BitMEX started liquidating levered longs. Those liquidations started cascading.
- "At one point, there were only ~$20M of bids left on the entire BitMEX order book and over $200M of long positions to liquidate. This means the price of BTC could have briefly crashed to $0 had BitMEX not gone down."
- Then DeFi (decentralized finance) broke completely with Maker at the epicenter. Two major breaking points: liquidations failed because of gas fees and oracles did not update prices.
March 12: The Day Crypto Market Structure Broke