Is this the real reason for the “brutal” sell off of Bitcoin, Ethereum, Binance BNB and Cardano?
Bitcoin and cryptocurrency prices have fallen sharply over the past month, with the combined cryptocurrency market losing around $ 1,000 billion in value.
The price of bitcoin fell from over $ 60,000 per bitcoin to less than $ 35,000 from mid-April to mid-May. Ethereum, the second largest cryptocurrency after bitcoin, has lost half of its value in just two weeks as its price has fallen following the sell off of bitcoin as Ethereum rivals cardano and BNB of Binance also crashed.
Now traders and analysts have dissected the bitcoin and crypto price crash, the wayward tweets from Tesla billionaire Elon Musk, and fears of a crypto crackdown in China apparently playing a lesser role in the sale. than initially thought.
“I really think what happened last week was similar to what you’ve seen before, where the futures market and the swap market were quite leveraged,” Roshun Patel, senior brokerage vice president of loans in bitcoins and cryptocurrency Genesis, Told Bloomberg Podcast on odd lots.
“Much of the positioning has been skewed down the risk curve in more volatile assets,” Patel said, highlighting bitcoin’s relative stability at just under $ 60,000 since early March, which suggests that the so-called altcoins including Ethereum, Binance BNB, and Cardano “are going to sort of rally together.
“And pretty much exactly the opposite happened, which is that bitcoin started to sell significantly. [and] it felt like it was going on and the pressure for cash selling somehow continued. When that happens, the windups can get pretty wild on the alts and they cascade down, ”Patel said, adding,“ Last week has probably been the most brutal I’ve seen in the past five years, even crazier than March . “
In March of last year, the bitcoin and cryptocurrency market collapsed by around 50% in just a few days, along with stock markets around the world as the pandemic shut down countries and communities. savings before the markets rebound widely over the next few months.
Tesla CEO Elon Musk took the bitcoin and cryptocurrency market breathless last month, slashing the company’s plans for bitcoin adoption and fears China is on the verge of to crack down on those who create and market bitcoin in the country, however, Patel is wary of naming one thing in particular as the cause of the crash.
“You could point the finger at a specific title or a specific story or a specific theme that could be the cause,” Patel said. “But it’s really hard to say if that was the ultimate reason the market sold off. At the end of the day, the crypto market is really just a spot order book and a derivative products order book. “
The bitcoin and cryptocurrency derivatives market has exploded over the past two years as crypto exchanges give traders the ability to bet on the future price of bitcoin, offering the use of borrowed funds to “leverage »Trading positions.
Meanwhile, theories that so-called “whales,” individuals who control large amounts of one cryptocurrency or another, manipulate the price of bitcoin and other tokens, continued to swirl around. .
“[There are] so many people ask me about whales’ downward price manipulation, ”says market veteran and author of The crypto trader Glen Goodman, speaking via Twitter DM.
The theory, according to Goodman, says that whales “might try to push [bitcoin and crypto prices] down so they can buy more, but sometimes they just want to sell. A lot. For years. As in 2018-19. “
After bitcoin’s huge rally in 2017 to around $ 20,000 per bitcoin, crypto prices entered a multi-year bearish market that saw the price of bitcoin drop to around $ 3,000 in late 2018.
“This current obsession with Wyckoff’s accumulation / distribution tells us nothing more than what the naked eye can see when looking at the chart,” Goodman said, warning that there could be another “wave of sales. ” In progress.
“[The bitcoin price] rose for months due to large purchases, then stagnated for three months when some holders started selling to new buyers, then the supply of new buyers started to dry up and the price fell. It is pure speculation for people to now call this another “build-up phase”. It might as well be a pause before another wave of sales. “