Huobi's sudden price plunge and recovery: Is there more to the story?
During trading hours on Thursday, the Huobi token noticed a sudden and sharp price plunge. Huobi token (HT) is native to the Huobi exchange and it has shown consistent growth over the past years.
The price of the Huobi token suddenly dropped from $4.74 to $1.83 which is more than a 60% decline in the price. The drop occurred only within 25 minutes. Despite the plunge, the token recovered immediately to $3.72. Later it was traded for $3.83 which is 20% less in the past 24 hours. After this sudden drop, HT emerged as the biggest loser among cryptocurrencies on that day.
Huobi’s advisor, Justin Sun, clarified that due to some users triggering leveraged liquidations, which is a normal occurrence in the cryptocurrency market, this happened. further added that Huobi plans to create a $100 million fund, to improve the liquidity of HT and other cryptocurrencies.
Was the reason for Huobi’s price plunge FUD?
There was a substantial increase of almost 13413% as the number of long liquidations for HT saw a surge to $2.55 million on March 9.
Recently, there was a sharp drop in the price of Huobi Token, due to some reasons. One possibility could be that the overall cryptocurrency market has been experiencing a bearish stance due to recent events. Financial regulators have taken a tough stance on cryptocurrencies, and a bank that was known for being friendly to crypto, Silvergate, collapsed. These factors could have made investors nervous and caused them to sell their HT.
Justin Sun also shared his stance toward the entire situation but the people didn’t take that quite well. Leaving several probabilities lying around for what actually happened.
Fall in HT availability on exchange
Many investors took out the short positions rather than the long ones, following a drop in HT prices. This led to a decrease in the ratio of long/short from 0.99 – 0.87.
The news of this sudden drop raised concerns among the community as social media was flooded with discussions. Furthermore the amount of Huobi Tokens available online also decreased as people moved out their funds to centralized trading. Probably due to already FTX issues going on.
Amidst the crisis, Huobi Global has announced that it is pursuing a trading license in Hong Kong to enable retail investors to trade popular cryptocurrencies.