5 Reasons Why Bitcoin Flash Crashes to Below $7,300


  • Red alert: Bitcoin has lost more than 10% of its value.

The leading cryptocurrency started the day above $8,000 only to fall to $7,293, the lowest level seen on Bitstamp today, a level last seen in May.

However, soon after the price surged back.

At the time of writing, BTC/USD has been trading at $7,491, as per Coincodex. The trading volume meanwhile has shot up as well, going from below $200 million last week to $595 million on top ten exchanges with real volume.

Altcoins are not far behind, they are actually doing what they do best. Imitate BTC with an added percentage.

Source: Coin360

Congress Members Blasting Cryptos

Bitcoin nosedived as Congress members talked about the downsides of cryptocurrency, during the hearing with Facebook’s CEO Mark Zuckerberg before the House Financial Services Committee regarding his crypto project Libra.

“Today’s selloff is a continuation of the themes that have been plaguing crypto for the past few months — increased regulatory scrutiny,” said Jeff Dorman, CEO of Arca. The “lack of positive catalysts” coupled with low trading volumes is what exacerbated this move lower.

Rep. Brad Sherman, D-Calif. said cryptos either make investors lose a lot of money or “displaces the dollar as the sole reserve currency in the world.”

Long Liquidation on BitMEX

There are also reports of more than $250 million liquidations of long positions on crypto derivatives exchange BitMEX. This liquidation might have been triggered by a sudden sell-off of 3600 BTC on Bitstamp.

BitMEX Price Index is derived from three indexes, Bitstamp, Coinbase, and Kraken. A sell order on any of these platforms, this time it might have been originated from Bitstamp, that added to the cascading effect.

A Hedge to Brexit

A potential reason for the sell-off shared by Brain Kelly, CEO of BKCM is that macro hedge funds were buying BTC as a hedge to Brexit which now seems less likely to happen in the near future.

As such, those macro hedge funds are now selling their bitcoin resulting in the price crash.

Zuckerberg’s testimony, according to Kelly is a “secondary effect,” adding “Buyers are reluctant to step up before they hear the Q&A.”

Miners’ Panic Selling

This drop in BTC price could be miners’ panic selling, according to Primitive Crypto’s Dovey Wan.

Wan took to Twitter to share that large miners using Bitmain’s popular Antminer S9 may have been what started this panic selling resulting in the drop in BTC price.

Kelly also said that Bitcoin miners who use high powered and expensive computers to mine BTC have a break-even price of between $7,500 and $7,900. Any price below this will cause miners or sell, he said.

Technicals at Play

Last but not the least, technicals have been pointing towards a fall.

The 10% drop in BTC didn’t come as a surprise. Analysts and traders have been expecting a fall from some time now.

As we reported, volatility has been declining since July and it has been expected to come back with a bang and today we saw exactly that. Also, the narrowing difference between the digital asset’s upper and lower band in the Trading Envelope Indicator was suggesting a move like mid-September when the price fell 12%.

Now, what remains to be seen is if we are going to $6k or not.

Bitcoin (BTC) Live Price

1 BTC/USD =$45,857.1499 change ~ -3.02%

Coin Market Cap

$858.07 Billion

24 Hour Volume

$26.2 Billion

24 Hour VWAP

$48.2 K

24 Hour Change

$-1,385.81

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