Since the Federal Reserve continued to raise interest rates on March 8 this year, the crypto-friendly bank Silvergate Bank, the banking giant Silicon Valley Bank (SVB), which plays an important role in the US technology field, the Swedish banking giant Credit Suisse Bank, and Washington Mutual Bank, have successively due to liquidity. The crisis led to bankruptcy one after another. Since then, Signature Bank, which provided services to the encryption industry (the U.S. stock market resumed trading and fell more than 99%), was also closed by the New York State financial regulator, and the banking crisis spread further.
Although the Federal Reserve, the government and other institutions have begun to actively discuss remedial measures, under the influence of the banking turmoil, the traditional financial industry is still severely damaged. However, this turmoil has played a certain role in promoting the development of DEX in the encryption industry. According to data from DeFiLlama, only on March 11 after the outbreak of the banking crisis, the total transaction volume of DEX soared to 15.12 billion US dollars, setting a new high in the past four months. The weekly growth rate exceeded 100%, and the ratio of aggregated DEX and centralized exchange (CEX) transaction volume (this indicator reflects the market dominance of DEX) rose to 26.66%.
However, this round of crisis also caused a short-term decline in many encrypted assets, which directly caused huge losses for many derivatives investors (especially leveraged loans), and rumors spread again in the encryption industry.
In fact, leverage is a high-risk investment tool, and there is no right or wrong in itself. We believe that the key to controlling it is: first, do not use loans to make high-risk investments, and second, do not expand the scale of loans to Excessive degree.
first level title
Huobi and the crusaders
Not long ago, a story about a large Huobi account named nnn in the major crypto communities was rumored to be damaged due to the violent fluctuation of the Huobi platform currency HT due to the bank crisis. It said that when the price of HT was 10 U, HT was mortgaged in exchange for 800,000 U of funds, and its leveraged liquidation price was 1 U, but the violent fluctuation of HT caused by the market caused the liquidation, and the final loss was about 20 million yuan.
Huobi immediately stated that it will fully bear the losses caused by the HT market fluctuations caused by the liquidation event. At the same time, in order to further improve the leverage warning and token liquidity, it also stated that it will invest 100 million US dollars to establish a liquidity fund, continue to improve the depth of the mainstream currency and HT market, and promise to synchronize the latest situation with the community in real time.
According to Coindesk, at 11:27 on March 10, Beijing time, the on-chain wallet address marked as Justin Sun has transferred 100 million USDC to Huobi to prevent the cliff-like decline of HT, and at the same time enhance the asset flow in Huobi station in all aspects Sexuality will allow the vast majority of users who suffer losses to receive reasonable and satisfactory compensation.
first level title
The truth of the incident
From the perspective of the cause of this liquidation event, the short-term sharp drop in the Huobi platform was affected by the downward pressure brought about by the industry’s macro events (the bank’s thunderstorm is the main factor). In addition, the lack of liquidity of HT led to short positions, which in turn caused many leveraged players to suffer losses.
As a platform party, Huobi itself is neutral and does not participate in transactions, which means that the fluctuation of HT mainly comes from market behavior, rather than platform intervention. After the warehouse breach incident, Huobi immediately proposed a plan to compensate the damaged users of the platform. It is understood that up to now, more than 98% of the users have negotiated a satisfactory solution with the platform and received compensation . For the remaining individual users who still have problems, Huobi is also actively communicating with them to negotiate a more satisfactory solution, and continue to maintain open communication, and strive to implement the compensation plan in place.
In fact, high-risk leveraged trading is more suitable for some institutional strategies or individual users with sufficient trading experience. Traders themselves must have a sufficient understanding of the leverage mechanism and grasp risk management in order to avoid personal losses caused by extreme market conditions.
In addition, the Federal Reserve is expected to continue to raise interest rates this year, and the announcement of the CPI is even more negative. The rate hike has indirectly led to multiple bank thunderstorms. Under the turbulent trend, the use of derivative products must be cautious, and the losses caused by personal investment behavior will be more difficult to recover.
first level title
Huobis progress
Although the public opinion in the industry has been unfavorable to many trading platforms in the past two years, in fact, Huobi has always maintained its own development momentum.
On the one hand, Huobi has always adhered to the development strategy of globalization and compliance, and has successively obtained many local financial licenses, such as the Canadian MSB license, the US MSB trust license, the British Virgin Islands SIBA license and other series of licenses. Lay the foundation for development. Since the Hong Kong Securities Regulatory Commission announced the virtual asset license system, Huobi has actively deployed in the region. In addition to obtaining the fourth and ninth types of licenses, it has also submitted new license applications. This means that Huobi is expected to become one of the platforms with the most globalization and compliance.
At the same time, Huobi has also reached a cooperation with Dominica to authorize the joint launch of Dominica’s national token and digital identity (DDID), which will play an important role in further promoting Huobi’s globalization strategy and layout of metaverse and other emerging fields.
On the other hand, Huobi is also actively deploying rich ecological products and innovative businesses, aiming to promote the development of cryptocurrencies and the encryption industry, and bring users a better trading experience. The Huobi Visa card is issued within a wide range, and the OTC Desk service launched not long ago.
