On Tuesday, Bitcoin’s price fell 15% of its network value in just under an hour starting from 16:00 UTC through 17:00 UTC. This is the first time that Bitcoin prices have fallen below the $8,000 mark since June 12th.
Amidst the frenzied sell off by the investors, $30 billion has been drawn out of the market within a period of 24 hours. The drop came as a shock to many as the cryptocurrency was enjoying a period of stability with the prices hovering around the $10,200 point. As of now, the coin is trading at sub-$8,500 levels in various markets.
While losing $20 billion in market value, Bitcoin also dragged the rest of the cryptocurrency market down with it. Other coins like Ethereum, Bitcoin Cash, Bitcoin SV, Litecoin, EOS, Binance Coin etc. have registered losses above 20%. The technical patterns suggest a potential 32 percent drop to $6,500 for Bitcoin in the coming days.
Experts in ByteTree, the blockchain data analysis engine predicted this fall back in the beginning of the month. One of their blogs mentioned that “We anticipate a sharp fall in bitcoin’s fair value in the coming weeks unless weekly and monthly transaction volumes reverse the current downtrend. At the present time, the market value is $10.8k with a fair value just under $8k, marking a 35% premium.”
Many theories have been put forward to explain this downfall and one of the most convincing ones is the series of liquidations and margin calls on 100x leverage crypto derivatives giant BitMEX. There have been concerns through the past years that leveraged derivatives exchanges such as BitMEX can affect Bitcoin’s price in this manner.
The Intercontinental Exchange, the NYSE owner, listed its Bakkt bitcoin futures on Monday but it did not take off as expected. Some experts interpreted the lukewarm take-up as evidence of the continued sense of hesitation towards cryptocurrencies from larger investors and mentioned this as another reason for the price fall.
“The disappointing Bakkt opening signals to the crypto community that institutions are less ready to invest in bitcoin at scale than was supposed, which means the price was probably too high and due for a correction,” said Alex Mashinsky, chief executive at crypto lending company Celsius Network.
Joe DiPasquale, CEO of BitBull Capital, has pointed out that the Bitcoin hash rate which dropped by 40% from about 98,000,000 TH/S to 57,700,000 TH/s, can be another reason behind this crash. DiPasquale also mentioned that he believes that the fundamentals of Bitcoin remain strong and the coin will recover in the coming days from this temporary fluctuation.
