On August 18, 2023, Bitcoin experienced a significant 7.33% downturn within 24 hours, accompanied by a notable volatility of 12.59%. This event, known as the "818 Tragedy," marked the most severe occurrence in the cryptocurrency market since the beginning of the year, resulting in a staggering liquidation worth 1 billion USD.
The preceding incident, famously referred to as the "Crypto Lehman Moment," took place in November of the previous year and involved the collapse of FTX. This incident severely undermined industry confidence and caused Bitcoin's valuation to plummet by 9.93% and 14.15% on November 8th and 9th, respectively.
In contrast to the unexpected and widespread FUD-driven events in November, the 8.18 plunge appeared somewhat inexplicable. There were no major bearish news or data releases, and it did not coincide with significant events like futures expirations or central bank decisions. While the stock market remained relatively stable with mixed movements in the three major U.S. indices, the only notable bearish news was the dismissal of allegations against the U.S. Treasury's sanctions on Tornado Cash. However, this had limited impact on the industry. Some analysts attributed the plunge to long futures liquidation, but this explanation seemed counterintuitive.
Irrespective of the crash's reasons, it is crucial to remain objective and stand firm when facing market fluctuations. Learning from each liquidation experience becomes a stepping stone towards achieving trading success, which relies on factors such as trading discipline, analytical abilities, market intuition, and luck.
One critical factor affecting trading success is the trading depth of the platform, especially during extreme market conditions like the "818 Tragedy." Platforms with sufficient depth can help maintain stability by handling large orders, preventing drastic price fluctuations. Conversely, platforms with insufficient depth are vulnerable to significant slippage and potential liquidations when faced with large unidirectional orders, such as futures liquidations.
Trading on a platform lacking depth can result in substantial slippage, making it challenging for users to execute trades at desired prices. This can lead to missed opportunities or executed trades far from ideal prices, turning profitable strategies into losses. Hence, when selecting a platform, trading depth becomes a critical consideration alongside factors like overall strength and security.
WEEX, now ranked sixth in CMC's global average liquidity ranking, is well-known for its trading depth. It boasts superior order book thickness and spread, closely following Coinbase and Binance. This ensures reduced trading costs and liquidity risks for professional traders and high-frequency trading users, earning recognition within the community.
Taking BTC/USDT perpetual futures as an example, let's examine the order book situations during the 8.18 crash on various platforms. Based on statistics, around 5:40 AM Singapore time on August 18th, the platforms with the lowest BTC/USDT prices, from low to high, were: OKX, Bybit, Huobi, Bitget, Binance, WEEX, MEXC, and Kucoin.
During this market crash, Kucoin, MEXC, and WEEX had the smallest price deviations, reducing the chances of investor liquidation. Trading on these platforms, along with Binance, would have helped investors avoid liquidation, unlike on OKX, Bybit, Huobi, or Bitget. Trading depth proves to be invaluable in critical moments, determining whether investors survive or face financial ruin.
Choosing a platform with better liquidity is essential for traders to avoid the nightmare of sudden market reversals and liquidation. What are your thoughts on choosing a platform? How do you perceive this plunge?