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Bitcoin Bears Liquidate $24M Short Positions as JPMorgan Tinkers with Blockchain Payments

Last Updated September 8, 2023 12:47 PM
Omar Elorfaly
Last Updated September 8, 2023 12:47 PM

Key Takeaways

  • Data shows Bitcoin holders liquidated $24M worth of Bitcoin in 24 hours.
  • Bitcoin short investors banked on the sudden drop in Bitcoin’s price.
  • JPMorgan has started developing a blockchain-based digital deposit token.
  • It’s for cross-border payments and settlements.

CoinGecko reports  a massive liquidation of Bitcoin amounting to $24M. The liquidation affected 26,390 traders and resulted in a sudden drop in price to under $27,000.

While the news may be negative for Bitcoin long position contract holders, Bitcoin short holders ought to reap the profits resulting from the sudden price discount.

In the meantime, JPMorgan, the biggest US-based bank announced  the start of the development of a blockchain-based digital deposit token for cross-border payments and settlements. While the bank aims for a launch in 2024, it has yet to receive approval from US regulators.

Liquid Bitcoin

On one end, Bitcoin has successfully proved its liquidation ability on several occasions. On the other end, mass liquidation often affects investors who choose to hold on to their tokens.

The recent mass liquidation was spearheaded by a transaction on Bitmex, a popular crypto exchange. The single transaction saw $5.15 million in XBT, the trading symbol for Bitcoin, liquidated. 

The liquidation also acts as a point of contention between investors who choose to take short or long positions on Bitcoin contracts.

Short positions denote investors who bet against Bitcoin, hoping it would drop in price.

Alternatively, long positions aim to see Bitcoin gain more value over time.

The liquidation incident included $32 million in both long and short positions for Bitcoin.

JPMorgan Enters The Race

The biggest bank in America is now throwing its hat into the crypto ring. On September 7th, JPMorgan told  Bloomberg that it’s now in the early stages of development of a blockchain-based digital deposit token for speeding up cross-border payments and settlement.

According to an unnamed source, the bank has already put together the infrastructure necessary for such a token. However, JPMorgan does not plan on pursuing its launch unless it receives approval from US regulators.

In a statement, a JPMorgan spokesperson said  “Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used.” He also added, “Should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly.”

JPMorgan has prior experience in the crypto space. In 2019, they introduced JPM Coin, enabling select corporate clients to transfer dollars and euros within the bank. The bank even reported  in June that it had used JPM Coin to process about $300 billion of transactions since its launch.

The upcoming token will differ from JPM Coin. It will initially be pegged to the US dollar but won’t rival stablecoins like USDT and USDC. Instead, it will facilitate interbank transfers, payments, and contract agreements.

“We believe deposit tokens will become a widely used form of money within the digital asset ecosystem, just as commercial bank money in the form of bank deposits makes up over 90% of circulating money today,” reads a study  by JPMorgan.

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