It is not true that HTX’s leveraged futures holdings were closed in the last 24 hours during the sharp market decrease, according to Justin Sun, the founder of both Tron and Huobi. Sun said that HTX “rarely” trades with funds borrowed.
Sun also promised a $1 billion fund to “combat fear, uncertainty, and doubt, invest more, and provide liquidity.” However, Sun has not disclosed much more about this fund since his initial speech.
HTX Leveraged Trade Rumors
On July 12, CryptoQuant founder Ki Young Ju pointed out that a $515 million long Bitcoin futures deal was open on the platform. This led to rumors about major positions with a lot of debt on HTX. Ju says that staked Tether stablecoins (stUSDT) were probably used as collateral for the loan.
He also points out that HTX’s $24 million Tether stablecoin reserve stayed the same. When we asked Sun and the HTX team for more information, Sun said that he had nothing to do with the significant leveraged trade and that it was the work of exchange clients who are allowed to use stUSDT and aEthUSDT as security.
Ju also said that Sun refused to disclose who the trader was, saying that it was against HTX’s customer policy to speak on or give information about trades made by clients.
The recent sharp drop in the stock and cryptocurrency markets before August 5 was mostly caused by the end of a long-running market trade called the “yen carry trade.” This process involves getting loans at low rates in yen to buy things that are worth dollars.
The Bank of Japan suddenly raised interest rates from 0.1% to 0.25%, which put many loans underwater. As a result, investors rushed to sell assets to get out of losing situations and protect themselves against future rate hikes.
In response, the crypto markets lost more than $1 billion as buyers tried to make up for the shortfalls that the interest rate hike had caused. Bitcoin’s value dropped below $50,000 for a short time, hitting a low point of about $49,000 on August 5.
Institutional buyers also sold off their holdings in a panic. Weekly data on Funds coming into and going out of crypto investment vehicles showed outflows of $528 million due to the market drop and general worries of a coming global recession.
