The sun shone for a long time in the crypto country, but yesterday a thunder cloud suddenly passed over. Bitcoin (BTC) fell sharply and altcoins followed blindly. What pulled the ground from under their feet?
Bitcoin loses 4.5% in a day
After two days of records, Bitcoin went under yesterday. At the end of the afternoon, the price took a dive for hours from $ 125,000 to a bottom of $ 120,600.
That is a decrease of 3.5 percent. Since Monday evening’s peak of $126,200, the digital currency has even become 4.5 percent cheaper. In one fell swoop, more than three days’ worth of profits went up in smoke.
Altcoins have already gone through the roof. Ethereum (ETH) has lost more than 6 percent and Dogecoin (DOGE) even 8 percent.
The culprits
The big question is of course why prices suddenly collapsed.
The trouble started at 3:30 PM when the American stock markets opened their doors. The major indices all fell slightly, but Bitcoin immediately took the brunt.
The simple explanation seems to be the many profit takings. And don’t blame investors. The Bitcoin price has risen by more than 15 percent in just over a week to its highest level ever.
This is reflected in the increasing Spent Output Profit Ratio (SOPR), an indicator that shows how many addresses sell their coins at a profit.
In addition, many long positions, where traders bet on price rises with borrowed money, were hit hard when the price turned. To avoid further losses, these traders are forced to sell their Bitcoins. This in turn causes additional liquidations, reinforcing the decline.
According to data from CoinGlass, as much as $514 million in long positions have been liquidated in the past 24 hours. On top of that, another $152 million in short positions (bets on a decline) were also forced to close.
Bitcoin has now recovered somewhat and is approaching the $ 122,000 mark. According to Dutch analyst Michaël van de Poppe, it could fall further to possibly below $ 120,000.
Source: https://newsbit.nl/waarom-is-de-cryptomarkt-zo-hard-gedaald/
