- Bitcoin price slid 15% between August 16 and 17, breaking its 55-day consolidation.
- This sudden downswing caused billions in liquidations, but volatility continues to tread near all-time lows.
- Investors wonder if BTC will experience more southbound moves as it hovers around the $26,000 level.
Bitcoin price has left holders dumbstruck after a 55-day consolidation streak ended with a bang with a 15% correction that wiped billions in open interest and liquidations. As BTC hovers around $26,000, onlookers are left with two thoughts – “Why did Bitcoin crash?” and “Where will it go next?” This article breaks down these two trains of thought.
Also read: Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bad timing for BTC slump as market weekend tranquil sets in
Bitcoin price crash and the reason behind it
While there are many theories on why the Bitcoin price crashed, two stand out – coiling volatility and forced liquidations. Just before the 2023 rally formed a top at $31,500, BTC was already trading in a tight range. Coupled with macroeconomic conditions and rangebound movement, the volatility of BTC hit all-time lows.
BTC volatility index
This tight range continued for nearly 55 days when Bitcoin price traded inside a $2,000 range. Over its 13-year lifespan, BTC has embarked on many low-volatile phases, but each time BTC’s range breached, it triggered an explosive move.
Technically, this breakout move, in hindsight, was likely.
The second reason is that this move was due to SpaceX’s alleged reduction in the Bitcoin balance sheet. Although rumors, this is also one reason for the sudden crash in Bitcoin price.
QCP Capital notes in their newsletter that a “large BTC and ETH gamma related perp liquidations on options exchanges Deribit and OKX, which together accounted for an outsized 50% of all liquidation flow.”
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.