Lorenzo Stroe
Independent Analyst
- Bitcoin is currently trading at $11,714 after a brief recovery from its flash crash.
- This is the second time Bitcoin experiences a crash after reaching above $12,000.
Bitcoin has now basically transformed the previous $10k resistance level into $12k. The first flash crash happened on August 2 with Bitcoin peaking at $12,123 and dropping to $10,518 in minutes. The initial cause of this dump was a large trader placing several big orders on Binance’s quarterly futures contract causing the price of Bitcoin to reach almost $100,000 before quickly dropping back. At the same time, this caused a massive bot-selling fest that drove the price of Bitcoin towards $10,000.
What are the causes of a flash crash?
One of the most common causes of a flash crash is the lack of liquidity, this usually happens with low market capitalization coins that have really low trading volume, however, at the same time, Bitcoin is considered illiquid for big players. This time around, some news outlets are reporting the event as Bitcoin ‘filling a Futures gap’, however, that’s not what caused the move, of course.
Because Bitcoin already had a flash crash before just after reaching $12,123 which means a lot of traders were looking at $12,000 as a strong resistance level. According to BTCtools, the number of long Bitcoin positions on BitMEX is highly outweighing the shorts. Currently, it stands at $710 million (92%) vs $61 million (8%). This means that any selling pressure is likely to cause a long squeeze even if it’s not a big one, which is exactly what happened.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
SEC doubles down on TRON's Justin Sun lawsuit dismissing claims over jurisdiction
The SEC says it has jurisdiction to bring Justin Sun to court as he traveled extensively to the US. Sun asked to dismiss the suit, arguing that the SEC was targeting actions taken outside the US.
XRP fails to break past $0.50, posting 20% weekly losses
XRP trades range-bound below $0.50 for a sixth consecutive day, accumulating 20% losses in the last seven days. Ripple is expected to file its response to the SEC’s remedies-related opening brief by April 22.
ImmutableX extends recovery despite $69 million IMX token unlock
ImmutableX unlocked 34.19 million IMX tokens worth over $69 million early on Friday. IMX circulating supply increased over 2% following the unlock. The Layer 2 blockchain token’s price added nearly 3% to its value on April 19.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days?
Bitcoin: BTC post-halving rally could be partially priced in Premium
Bitcoin (BTC) price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days?