Weekend started with a shock for coin owners. In a shorter period of time, Bitcoin started a steep decline on Sunday morning from $59K to $52K. The fall in pricing led to $10 billion in positions being liquidated. The sale on the crypto market was similar to a “bloodbath” at weekends. The overall crypto market capitalization plummeted by 200 billion dollars a day, but at some point before the recovery the decline hit 300 billion dollars.
The market has shown its greatest readiness for a trend reversal in recent years, rather than a weekend rally. The business was naturally divided between optimists and pessimists. The former regards drainage as an excellent chance to purchase the asset in decrease. It seems the theory that the price of an asset follows the hash rate has been confirmed.The latter conclude that the direct listing by Coinbase was the final stage of the Bull Rally and we are likely to see a fresh, protracted decrease on the crypto market in the future.
The key explanation for the sudden fall is hard to identify. As is often the case, various factors formed a perfect storm. Bitcoin’s hash rate fell dramatically because of a power outage in the Xinjiang region of China. Power returned, but there was an unsettling feeling as market participants realized that the whole system was once more vulnerable. The total transaction fee surpassed $50, something that hasn’t been seen since 2017 due to the decrease in the Bitcoin network hash rate.
Rumors that the U.S. regulator may open an investigation into some financial institutions that are accused of laundering funds via cryptocurrencies could also affect the collapse of the crypto market.What has occurred exactly now is the key issue of concern to all market participants, whether optimistic or pessimistic? Is it a good time to enter the market at a major rebate, or is it time to sell your assets aggressively? The weekend rally reflects the atmosphere of the retail sector, but everyone awaits the start of the workweek as institutional investors have their say.
Would big capital see the cryptocurrencies crash as a strong chance of opening additional positions? First and foremost, institutional investors are not enthusiasts of cryptography. Nobody in big money has any emotion towards any asset class, so they are called “intelligent money.”It would be fascinating to know if the sales in the crypto market would become an incentive for similar decisions concerning the conventional market, turning them into an early ‘greed indicator.’
