Originally published on: August 05, 2024
Amid rumors circulating in the market about Huobi (HTX) facing liquidation of leveraged futures positions, Justin Sun, the brain behind Tron and Huobi, has stepped forward to deny these claims. He emphasized that HTX rarely dabbles in leveraged trading activities, quelling concerns surrounding the platform’s stability during the recent market slump.
In a bold move to reassure investors, Sun announced a $1 billion fund dedicated to combating fear, uncertainty, and doubt in the market. However, details of how this fund will be utilized remain sparse, leaving many wondering about its impact.
Despite attempts to seek clarification from Sun regarding these developments, responses were not forthcoming at the time of reporting. Speculation regarding HTX’s leveraged positions gained traction following CryptoQuant founder Ki Young Ju’s revelation of a massive $515-million long Bitcoin futures trade on the exchange.
Ju pointed out that staked Tether stablecoins were likely used as collateral for the trade, raising questions about the source and implications of such a significant position. When pressed for a response, Sun distanced himself from the trade, attributing it to exchange clients authorized to use various collateral types.
The turbulence in the market stems from concerns related to the unwinding of the “yen carry trade,” a long-running strategy involving yen-denominated loans for acquiring dollar-denominated assets. The recent uptick in interest rates by the Bank of Japan triggered a chain reaction, causing investors to scramble to offset losses and shield against future risks.
As the crypto and stock markets reeled under pressure, over $1 billion was wiped off the market value, leading Bitcoin to briefly dip below the $50,000 threshold. Institutional investors joined the panic selling, with data revealing significant outflows from crypto investment vehicles as recession fears loomed large.
Despite the market’s roller-coaster ride, Sun’s firm stance on HTX’s stability and proactive measures to allay concerns suggest a potential path to weathering the storm. Stay tuned for more updates on the unfolding market dynamics and their impact on the crypto landscape.