Here’s What’s Behind the Bitcoin (BTC) and Ethereum (ETH) Crash?
- $100 million spoofing on BitMEX might not want to buy BTC and send it to the moon
- It wasn't the record RSI indicating Ethereum is “overbought” but whales
- An exploit from Fulcrum trading helped make a hacker 10,000 ETH, worth about $3 million
After less than five days of breaching the $10,000 level, Bitcoin price took a drop and went as low as nearly $9,750 on Bitstamp.
However, these moves aren’t unprecedented for bitcoin or the crypto market. In January 2018, we saw a similar move when bitcoin opened the day at $11,144 with a high of $11,688 and low of $10,274 but closed the day at $11,080. There has been a negative 12% move from high to low but was “essentially hidden when calculating daily volatility and sharpe.”
“One of the issues in comparing the volatility and sharpe ratio of bitcoin to traditional assets is that it frequently has moves like this that aren't always picked up,” noted analyst Ceteris Paribus.
He added, “BTC could close the day flat and this move wouldn't show. It happens more frequently than any other asset.”
The retracement we saw yesterday came after Bitcoin surged more than 40% in 2020 which according to trader Crypto Michael, “is still very healthy for this market,” even if BTC goes to $9,500. However, this doesn’t mean the next stop would be $3,000 because the trader says, “We're still early.”
Bitcoin’s bottom of the range RSI analyst Mati Greenspan pointed out is flashing oversold ad “traders who have balls wait specifically for this kind of setup.”
What Caused the Drop?
Also, as we reported, the technical indicator of Ethereum has been flashing a warning signal with RSI surpassing 70 which has “never before been this high.” This means Ethereum has been overbought but economist and trader Alex Kruger says that’s not why the crypto asset crashed.
“ETH didn't just dump because of “RSI overbought”. This is just a metric that speaks of an overextended chart and heightened downside vulnerability in the event of selling pressure, and may thus attract such pressure. Price dumped because a whale triggered a crash. Simple,” said Kruger.
Trader Jacob Canfield also noted, “Looks like there was a flash crash caused by an exploit from Fulcrum trading. Most likely a buy the dip opportunity once they remove the sell walls.”
A DeFi platform Fulcrum offers non-custodial crypto margin trading and lending service suffered an attack where the attacker got out 10,000 ETH, worth about $3 million. The exchange assured that the funds are SAFU and there have been “zero losses” in this attack.
Such a massive bid might indicate a whale wants to buy BTC and send the price to the moon but Kruger explains that’s not the case as “Whale may be just bluffing.”
Around there a $100M spoofer showed up briefly on the bid. Need to be careful trusting order books in markets where spoofing is fully allowed. pic.twitter.com/1vBquGwUVS
— Alex (@classicmacro) February 15, 2020
Now, moving forward, trader Hsaka is expecting $9,600 soon. For the most part, bitcoin breaking the channel and bouncing off the key support mostly looks like “shorts filling” to trader Canfield. The good thing is the digital asset has retested the former trend support as resistance.
2 months correction before market explodes. 🔥
— CryptoWolf (@IamCryptoWolf) February 16, 2020
Trader Crypto Michael, however, maintains this to be “nice drop” which is instant to the first interest zone.
“Uptrending markets give you only a few retracements and usually they are bought up quite quick,” he said.