Bitcoin (BTC) almost crashed and burned, dropping to a low of $38,555 in the last few days. It’s recovering, now above +$40,000 again, but the drop triggered a whopping $83 million in liquidations in the futures market, and over $55 million long positions liquidated. That’s crazy numbers.
And they could be regretting it now. Oh, and $27.42 million in short positions liquidated.
Crashed and burned was a bit dramatic. BTC will never totally crash and burn. Bitcoin’s pricing trends show huge price fluctuations occur every so often. And at the time, it wasn’t just BTC. Ethereum (ETH) dropped below the value of $2300.
Still, it was a crypto market bloodbath for more than 24 hours, with liquidations skyrocketing as the selling pressure of BTC forced the value even lower.
What a 24 hours that was for BTC.
Now that it’s recovered, we’re going to explore why there’s widespread selling panic, why the $40,000+ BTC value is the holy grail, and what’s predicted to happen shortly.
The sudden drop in Bitcoin’s value triggered a widespread panic among investors, leading to a sell-off that exacerbated the plunge. A confluence of factors contributed to this nervous reaction. Key among them was the large-scale redemption of Grayscale Bitcoin Trust (GBTC) shares by bankruptcy estates such as FTX.
This move flooded the market with GBTC shares, applying downward pressure on Bitcoin’s price.
The launch of a Bitcoin ETF earlier in the month led to a sell-off of $2 billion worth of coins, thereby intensifying the selling pressure. Coupled with concerns about regulatory investigations into significant figures in the cryptocurrency space, the market sentiment took a bearish turn.
The $40,000 mark is more than just a number for Bitcoin enthusiasts and investors. It’s a psychological threshold signifying stability and confidence in the cryptocurrency’s value.
Crossing this boundary either way can trigger significant market reactions. When Bitcoin’s value dips below this level, it’s seen as a sign of weakness. Conversely, when it surpasses this mark, it’s viewed as a bullish signal, attracting buyers and pushing the price further up.
This sentiment-driven reaction underscores the importance of the $40,000 level in influencing market dynamics.
Bitcoin’s price history is…long. The recent decline to a 7-week low of $38,550 follows a pattern observed over the years. Bitcoin knows how to create panic.
And even at the price it’s at now, it’s still a dip from the January 11 peak of $49,000 following the approval of spot BTC ETFs. If you had bought and sold BTC within that window, there was a potential to quickly capitalize and flee.
And it’s not the first time. Here are some of the most notable BTC price dips.
The dreaded April 2013 dip. If you were part of this, your life probably flashed before your eyes. The eye-watering 83% dip was the largest to that date.
The crash was precipitated by the failure of Mt. Gox. It was the largest Bitcoin exchange and couldn’t handle the surge in trading volume. The platform’s subsequent shutdown due to a security breach sent shockwaves through the market. Prices dropped from nearly $260 to $50.
In December 2013 , not long after the April disaster, Bitcoin’s value halved overnight. It lost 50% of its worth. Imagine waking up to that.
This drastic drop was a direct result of China’s ban on Bitcoin. It was a move that highlighted the impact of regulatory actions on cryptocurrency markets. China’s troubled relationship with cryptocurrency continues to influence market dynamics to this day.
The year 2017 was a watershed moment for Bitcoin reaching an all-time high of almost $20,000, only to plummet by 84% in a year. 84%! And we were panicking about a minor $2k dip.
The dramatic drop was a combination of profit-taking by investors and a series of negative events. There were major security breaches in Asian markets and rumors of impending bans on Bitcoin in Korea and Japan.
These factors contributed to a market-wide panic, driving the price down and ushering in a prolonged bear market through 2018. The BTC Dark Ages.
Predicting Bitcoin’s future is…almost impossible. You can monitor the price trends and do your candlestick graphs, but it can all change. Wake up to one wrong media story, and you’re scared.
Still, analysts anticipate that selling pressure may ease as bankruptcy estates complete their share sell-offs. And that’s evident with the rapid price rebound.
Nevertheless, the potential for large outflows from GBTC poses a risk of further price declines. Beware. There are a few potential things in the pipeline that could influence BTC volatility.
While Bitcoin remains a focal point in the cryptocurrency market, several altcoins are gaining traction and recovering. Leading the altcoin recovery are:
Mid-cap altcoins are also showing significant upward trends. The most popular and promising are:
Bitcoin’s recent price movement probably made many people regret their decision. Just as soon as it dipped, it rose above $40k. And with Bitcoin’s recovery and the resurgence of altcoins, the market is simply doing what it always does – fluctuate.
And the liquidations are what the market always makes people do – panic.
Disclaimer: The above references an opinion of the author and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. Invest responsibly and never invest more than you can afford to lose.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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