The recent Bitcoin price crash has left some crypto investors wondering if it is a bubble, a correction, or something else entirely. In any case, there are several reasons why Bitcoin might be dropping in price and what to do to protect your investment. Several factors have been identified as causing the recent price drop, which include a surge in institutional demand and a lack of liquidity. A few of them are discussed below. However, the main reason is still the same: Bitcoin is a volatile currency and a crash could lead to a massive correction.
One of the reasons for the crash is that many crypto traders attributed it to Binance’s inability to meet demand, which caused a rout in selling pressure. Those involved in crypto exchanges were waiting to buy on dips, but the sudden crash in prices caught them off guard. A prominent crypto trader has pointed the finger at BitMEX, citing it as the reason for the price drop. At the time of the crash, Bitcoin was hovering around $3,600 and spot buyers were ready to jump in on the dip. Traders had predicted a bull run, so the sudden bearish trend is a shock.
The crash is a flash crash. BitMEX, the largest exchange in the world, is accused of manipulating its prices in order to generate volume. The Bitcoin price has fallen by almost $4000 in a matter of days, following a massive sell-off. This massive sell-off resulted in huge liquidations on BitMEX and a large number of long-term positions being liquidated. If BitMEX is guilty of market manipulation, the price drop will be worse for everyone else.
A major factor contributing to the stabilization of Bitcoin prices is the influx of institutions. As a new asset, Bitcoin is subject to substantial price volatility. Increased adoption will keep the price stable as more BTC are held by individuals. Nevertheless, the future of Bitcoin looks uncertain – there is no definitive down trend for the cryptocurrency yet. As a result, Bitcoin will likely continue to be more closely related to other financial markets in the coming years.
Despite these risks, the cryptocurrency market is experiencing a wild ride. The Financial Conduct Authority has warned individuals to avoid investing in cryptocurrencies. Furthermore, the Chinese government has imposed sanctions on a number of crypto-mining operations. In fact, mining coins uses enormous amounts of energy, which has caused many blackouts across the country. In the southwestern province of Sichuan, authorities ordered crypto-mining projects to close.
A recent trend for bitcoin prices reflects a lack of supply. Traders are risking all their savings to buy bitcoins. While this is a risky way to invest, it is possible that Bitcoin prices could rebound around the 61.8% Fibonacci retracement level at $51,240. It has been difficult to predict the future of bitcoin prices, but the market is certainly a fascinating place to follow and trade in cryptocurrency.