Yesterday, Bitcoin fell from $52,000 to $43,000 in less than an hour. This unexpected plunge had traders dazed and confused as to why and how it happened. This brutal collapse led to a total of $3.54 Billion of liquidation in derivative markets according to Cryptodiffer.
What Exactly Happened with Bitcoin?
Taking a look at the data provided by Tradingview, we can see after reaching $52,000, a massive sell-off started to happen early in the day. Bitcoin was very volatile before this collapse with the RSI level above 60. Generally speaking, when there is a bullish outlook and the greed level is high accompanied by tendency to buy, volatility rises. At that point, overleveraged traders with long positions expose themselves to the upcoming correction. In that scenario, a chain reaction of long accounts being liquidated causes a crash.
Who is to Blame?
According to crypto analyst Michaël van de Poppe, it was the “overleveraged positions getting liquidated in a chain reaction, causing a massive wick”.
Poppe had predicted before that the $49,500 support level had been a crucial point to hold the price. And once it failed, all hell broke loose.
At this point, He believes that if the price could close above $47k to $48k, it could be an outlier and BTC will turn bullish not long after.
However, another major contributor to the crash are the whales according to analyst Scott Merker.
Merker states in a tweet that a massive dump by whales was responsible for the crash.
Perhaps both Poppe and Merker make solid points and the two stated reasons are partners in crime.
It has been said before that trading is all about navigating between the two primary emotions of fear and greed. For the crypto market, you can check the Fear & Greed Index here. It will help you to stay ahead of the predominant emotional direction in the market. Essentially, at times of extreme greed like yesterday volatility has a massive rise resulting in big crashes.
Buy and Sell Bitcoin Quickly on Hi.exchange
If ever, you were in need to buy or sell your BTC, hi.exhange provides automated exchange services with the best possible rates. Our consensus algorithm finds the best exchange rates based on the competition. To make it an even better experience, we provide 24/7 customer support. No KYC required, no sign up process, we respect your anonymity. If you want to stay ahead of the game, you can visit hiexchange blog for daily opinion articles, technical analysis and news.