Key Takeaways:
- The crypto market faced over $1 billion in futures liquidations amid recession fears.
- Justin Sun refuted claims about HTX’s leveraged positions, asserting minimal involvement in leveraged trading.
- The market drop was driven by the unwinding of the yen carry trade after the Bank of Japan’s interest rate hike.
Over the weekend, the crypto market experienced significant turmoil, resulting in the liquidation of over $1 billion in futures positions due to escalating fears of a looming recession.
Despite the market downturn, Tron and Huobi (HTX) founder Justin Sun dismissed rumors that HTX’s leveraged futures positions were liquidated.
The rumors about our positions being liquidated are false. We rarely engage in leveraged trading strategies because we believe such trades do not significantly benefit the industry. Instead, we prefer to engage in activities that provide greater support to the industry and…
— H.E. Justin Sun 孙宇晨 (@justinsuntron) August 5, 2024
Sun asserted that HTX rarely engages in leveraged trading and announced plans to allocate $1 billion to address market fears and provide liquidity, though details were sparse.
Speculation about HTX’s leveraged positions started on July 12, when CryptoQuant founder Ki Young Ju pointed out a $515-million long Bitcoin futures trade on the platform, possibly collateralized by staked Tether stablecoins (stUSDT).
Sun denied involvement and clarified that clients of the exchange, not HTX, were responsible.
There is a $515M BTC-USDT futures position open on HTX, which has increased fivefold in the past two months.
— Ki Young Ju (@ki_young_ju) July 12, 2024
However, the exchange's USDT reserve remains at around $24M, leading me to question whether other collateral like stUSDT was used. As of now, HTX has $460M in $stUSDT.… pic.twitter.com/yxV8xqguqS
The market decline is primarily attributed to the unwinding of the yen carry trade following an interest rate hike by the Bank of Japan.
This led to a sharp sell-off in assets, including cryptocurrencies.
As a result, Bitcoin briefly fell below $50,000, and institutional investors withdrew $528 million from crypto investment vehicles amidst recession fears.
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