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
Polygon joins forces with WSPN to expand stablecoin adoption
WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.
Coinbase envisages listing of more meme coins amid regulatory optimism
Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B
As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: Rally expected to continue as BTC nears $100K
Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.