What was the reason for the fall of $1,300 in the price of Bitcoin the other day?
Yesterday, Bitcoin experienced its worst fall since the collapse of the FTX exchange. The price of this digital currency dropped by $1,300 within an hour at the start of the trading day in Hong Kong and briefly reached below $22,000.
What were the reasons for the fall in the price of Bitcoin?
To Report NewsBTC The uncertainty surrounding the possible bankruptcy of Silvergate was probably the main reason for the fall in the price of Bitcoin last day. A bank that plays a major role in providing liquidity to the digital currency market by creating a gateway to the fiat monetary system.
The bank delayed filing its annual performance report with the US Securities and Exchange Commission yesterday. Doubts about the existence of financial problems caused Silvergate’s stock price to drop by more than 50%. Several major cryptocurrency companies, including Coinbase, Kraken, Pexos, and Galaxy Digital, subsequently terminated their business relationships with the bank.
However, it would be too simplistic to think that this is the only reason for the fall in the price of Bitcoin. As cryptocurrency analyst Miles Deutscher wrote on Twitter, the barriers to growth in the cryptocurrency market are increasing.
In addition to Silvergate, the payment of Bitcoin by Matt Gax to customers, the possibility of withdrawing Ethereum after the Shanghai update and high inflation, the liquidation of a large volume of transactions and the weakness of the stock market can be other reasons for falling prices. Deutscher explained:
Remember that not all of these reasons are necessarily principled, but they don’t need to reduce business activity either. I think the reason for the price correction is a combination of these factors along with the liquidations that exacerbated the situation.
In particular, the liquefaction of such a large volume of long stocks in such a short period of time is likely to play a significant role in the price collapse. According to CoinGlass data, in the last 24 hours, $243 million of trading positions were liquidated, of which $185 million occurred within 45 minutes. Bitcoin transactions accounted for a little more than 84 million dollars of liquidated transactions.
Did the whales of the spot market play a role in the price?
Referring to the cumulative volume delta (CVD) of the Bitcoin spot market and the order delta, an analyst with the nickname Skew said that a large sell-off in the Binance spot market has led to the liquidation of long trades.
As you can see, the Binance spot market has started falling one minute earlier than any other spot exchange. A significant volume has led to a price drop and possibly someone exiting the cryptocurrency market. The target price will be $22,000.
Analytical firm Anchan Sentiment tweeted that it has been more than 4 months since the price of Bitcoin fell by 5% or more in an hour. But yesterday, we saw this happen again. A rebound in price depends on how worried investors are, allowing whales to collect bitcoins from inexperienced and emotional traders.