For 3 major reasons, Bitcoin’s price dropped more than $800 in under five minutes on Tuesday, pushing the broader cryptocurrency market into the red.
June 2 2020 | AtoZ Markets – A sudden surge in sell orders has dropped Bitcoin (BTC) price below $10,000. The price of Bitcoin plummeted to $9,700 before heading even further, down to $9,400. At the time of writing, the price is currently recovering a little, back up to $9,500 but the price action isn’t over yet.
Other cryptocurrencies are also falling, with Ethereum (ETH) down to $230 and XRP at $0.20. OMG has also fallen five percent in the market drop, losing some of its gains it experiences due to its Tether (USDT) integration.
Bitcoin only broke upwards through the $10,000 mark yesterday evening. It reached highs of $10,500 before falling back to $10,100 where it rested for most of today.
“Bitcoin doing bitcoin things again,” tweeted analyst Joseph Young, having noticed the price drop.
Bitcoin doing bitcoin things again— Joseph Young (@iamjosephyoung) June 2, 2020
“Welp. Looks like bitcoin didn’t fix this,” added podcast host Udi Wertheimer.
3 Reasons Bitcoin price nosedived to $8,600
Below are three major factors that caused the price drop.
1# $100 million wiped from BitMEX
When the price of Bitcoin broke up through $10,000, it liquidated a lot of traders who were shorting the cryptocurrency (betting the price would go down). According to Datamish, $135 million was liquidated on Bitcoin futures exchange BitMEX in the last 24 hours, likely during the spike.
However, as the price came down, many traders going long were also liquidated to the tune of $100 million. The price even dropped further on BitMEX—falling down to $8,600—making things worse.
ONE WAY TICKET TO REKT CITY!!— Ivan on Tech (@IvanOnTech) June 2, 2020
ALL SHORTS REKT
ALL LONGS REKT pic.twitter.com/Cb1kLIN2gq
Some traders jokingly blamed those who had said we will never see Bitcoin below $10,000 again. Just a few hours prior, crypto personality Hodlonaut (who invented the Bitcoin Lightning Torch) tweeted, “I don’t usually make predictions. But this is too obvious not to call. We will never see Bitcoin below $10k again.” He might regret that tweet.
2# BTC rejects at a multiyear resistance
Bitcoin has tested the $10,500 resistance level a total of three times in the past eight months.
The top-ranked cryptocurrency on CoinMarketCap rose to as high as $10,500 in October 2019. Within four weeks, it dropped to $6,400, bottoming out in a six-week span.
In February, Bitcoin made another attempt to surpass the $10,500 resistance level. After rejecting violently to $8,400, BTC fell to as low as $3,600 in the following four weeks.
This is the third time BTC has tested the same level in the last three quarters, and it is also the third time it has been met with a similar reaction.
As BTC fails to reclaim the same level for three consecutive times, the question traders are asking is if BTC is ready to break out of it and initiate a proper bull trend in the coming weeks.
Given the intensity of the drop and the breakdown of the short-term market structure, the probability of seeing Bitcoin testing higher resistance levels in the near term found at $11,500, $12,400 and $14,000 decreased with the recent price action.
3# Whales moved their funds
A few hours before the drop happened, whales moved their funds to BitMEX and Binance.
CryptoQuant CEO Ki Young Ju said:
“Multiple significant BTC inflows from Binance and BitMEX a few hours before the dip.”
The combination of whales selling Bitcoin right at a multiyear resistance with high funding and the majority of the market being long triggered a strong long squeeze within a short period of time.
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