Highlights:

Bitcoin plunges to $3.8K for the first time since April 2019.
The cryptocurrency’s deep dive came alongside a massive liquidation spree on the BitMEX crypto exchange.
The price recovered by $2,000 but left the market in further distress, especially amidst the rising Coronavirus risks on global financial markets.

Bitcoin fell to its 10-month low this Friday the 13th as liquidation went rampant on crypto derivatives exchange BitMEX.
Sam Bankman-Fried, the CEO of Hong Kong-based crypto derivatives exchange FTX, alleged that BitMEX failed to liquidate an adequate number of bitcoin tokens from leveraged long positions. He noted that the exchange’s order-book was ten times thinner than what was required to balance the liquidation demand.
As a result, the XBT/USD contract rate on BitMEX fell to $3,596, much lower than the cryptocurrency’s spot price across other exchanges. The pair staged a sharp reversal – of more than $2,000 – only after BiTMEX went offline. Mr. Bankman-Fried noted that bitcoin risked falling to zero had not BitMEX shuttered its trading.

12) BTC rallied without the gigantic sell wall of the BitMEX liq. And even more than that–BTC rallied, so fewer people *had* to be liquidated….. Creating a self-fulfilling prophecy. If we could will BTC up above $5k, maybe then it would no longer *need* to go down.
— SBF (@SBF_Alameda) March 13, 2020

BitMEX denied Mr. Bankman-Fried’s allegation, labeling it as a “conspiracy theory.” But the liquidation of $993 billion long positions on its platform left the entire cryptocurrency market in a deep state of shock, with Atlanta-based mining firm BitPico even saying that BitMEX orchestrated the crash.
“Per our analysis, BitMEX liquidated $993 billion long positions using their own bots & capital,” it tweeted. “[At around] 2:43 UTC, activity across all exchanges stopped and BitMEX database crashed. Today’s BTC manipulation was caused by one entity.”
Bitcoin’s V-Shape Recovery
Bitcoin’s spot rate on Coinbase exchange plunged to $3,858 as of around 0200 UTC on Friday. After BitMEX’s standby, the cryptocurrency rebounded to as high as $5,858, its gains partly following upside moves in global equities. It so far fell in tandem with the US indexes as a rapidly growing Coronavirus pushed the global economy to the brink of recession.
BTC/USD recovers by circa $2,000 after diving to $3.8K | Source: TradingView.com, Coinbase
Bulls have pinned hopes for a broader bitcoin recovery as the market heads to neutralize its oversold technical indicator, the Relative Strength Index, or RSI. At below 30, RSI signals a move upward in the coming sessions, given its history of leading price recoveries.
Bitcoin climbs above 200-week MA | Source: TradingView.com, Coinbase
Also, on bitcoin’s weekly chart, the price is maintaining a strong floor near its 200-week moving average wave. The indicator has previously called out bitcoin’s bottoms, which means there is a possibility that bitcoin could floor-out at $5,500, followed by a decent bounce to the upside.
The Coronavirus Pain
Bitcoin’s latest upside also followed stimulus packages announced by the European Central Bank and Federal Reserve to protect economies from the Coronavirus fallout. The ECB decided to offer cheaper loans with interest rates fixed at negated 0.75 percent. It also expanded its bond purchasing program.
On the other hand, the Fed confirmed that it would inject $1.5 trillion to banks via its repurchasing agreement program, marking the beginning of a stabilization process after Thursday’s erratic sell-off in the US stock market. Investors with higher risk-appetite could direct some part of the new money to the bitcoin market.
But that does not solve the core issue: the Coronavirus pandemic that could infect up to 1.7 million people in over a year, according to a New York Times report.
Analysts believe people will continue to hedge into cash more than gold or bitcoin as long as Coronavirus pandemic affects their sentiments.

The fact that Treasuries, munis, and gold are getting hit tells me that everything is for sale right now. One giant margin call where even the safe-havens aren’t safe anymore. Except for cash.
— David Rosenberg (@EconguyRosie) March 12, 2020

So it appears, more pain is coming to the bitcoin market from the fundamental front.