Bitcoin Price: Drops $500 in an Hour Amid Acute Crypto Selloff
Like in any market, there are green days and red days in the cryptoeconomy. August 28th was one of the latter, as most cryptocurrencies in the top 100 by market capitalization were sharply down on the day.
Volatility comes as no surprise to even novices in the space at this point. But what is notable about the Wednesday selloff was just how quickly it occurred. Indeed, the bitcoin price was hovering at $10,245 USD just after noon. Within one hour, BTC had fallen nearly $600 to hit $9,680 and today has fallen lower touching $9500.
For its part, bitcoin fared better than other big-cap cryptocurrencies in intraday trading. At press time, bitcoin was down around 5 percent from its price one day prior. Other projects like ether (-7 percent), litecoin (-8 percent), BNB (-8 percent), and EOS (-8 percent) had a tougher go in the same span.
It’s not clear what drove the rapid midday selloff, as there were no blockbuster headlines rocking the space when it occurred. Some traders in the space chalked the downtrend up to normal market chop, while others focused in on bots and “whales” — traders with large amounts of crypto — as the culprits.
That feeling when the bitcoin price drops fast and hard. Image via Coinbase
Of course, as with many sharp movements in crypto markets, we may never know the exact source for the fast drop in prices on Wednesday. But what is clear is that the bloody day for traders comes at an interesting and ambiguous time for the cryptoeconomy.
Bear or Bull?
That is to say, some analysts have wondered if the recent bullish momentum in cryptocurrency prices is losing steam and giving way to another bear market. On the other hand, there are those who have argued that a bull market is only just beginning.
For example, a few days ago cryptocurrency trader and analyst Murad Mahmudov said that while many of his peers are starting to turn bearish, he is confident that the best is yet to come in the current market cycle.
People out here be talking about the Weekly MACD 'bear cross' like its some kind of a doom verdict.
Ironically it marked the local bottom every single time during the last bull cycle.
I repeat for the last time. This is a BULL market. pic.twitter.com/Uk015uk17x
— Murad Mahmudov
(@MustStopMurad) August 25, 2019
“Contrarian view: 9080 [BTC] was the bottom, ~one more month of sideways then we continue steadily upwards,” Mahmudov wrote this week.
Beyond charts, others have maintained that the current international political climate is ripe to help bitcoin ascend further as a safe haven asset.
Hans Hauge, a Senior Quantitative Researcher at Ikigai Asset Management, recently noted that inflationary measures generated by the ongoing U.S.-China trade war could end up being good for bitcoin, as “this inflation pushes up the price of ALL assets, but especially those that are scarce, such as commodities, like Gold and Bitcoin.”
What Goes Up, Can Come Down … And Get Rekt
Cryptocurrency derivatives have become an increasingly popular way to speculate on the prices of cryptocurrencies. And on days like August 28th where markets move fast, it’s common to see lots of liquidations across the space as peoples’ bets — sometimes long, sometimes short — go under.
As Wednesday was a red day, it was traders longing crypto valuations that felt the bite this time.
For example, when the bitcoin price saw its midday drop, heavyweight cryptocurrency derivatives platform BitMEX liquidated approximately $150 million worth of “long” trades.
A lot of bitcoin longs got liquidated on BitMEX on August 28th. Image via Redditor u/coinsmash1
Such liquidations are only going to become more common as more cryptocurrency derivatives platforms continue to enter the space.
To be sure, the profits possible from margin trading will continue to attract risk-averse traders that can stomach high stakes, and that attraction will continue to ensure there are large collective liquidation events when prices spike in either direction.
For one, the world’s most popular crypto exchange Binance is reportedly working on a crypto futures offering that will offer traders 20 times leverage.
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