In just a few hours, the cryptocurrency market sank 30%. He lost more than $ 30 billion of his capitalization. Let’s see why bitcoin sank.
Impact of coronavirus, oil war, market panic
Panic in the global financial markets is growing day by day, and it is intensified by regulators and authorities. And there are several reasons for this. Initially, the coronavirus pandemic, which started from China, sowed panic in European countries, and led to bans on the movement of citizens outside the borders of states. Then a war broke out in the oil market between Russia and Saudi Arabia, which dropped prices by a third. Everything was completed by the decision of the President of the United States to limit the entry of Europeans into the United States for 30 days.
These conditions led to this situation, according to the founder and investment director of Morgan Geek Capital Management, Mark Yusko. After all, the crisis leads to a drop in liquidity and pushes for the sale of assets, and the bitcoin and gold markets have good liquidity.
Executive Director of EXMO cryptocurrency exchange. Sergey Zhdanov, giving an exclusive comment to BeInCrypto, says that panic actions in the markets are understandable, because even gold does not have a solid status of a “safe asset”. And the cryptocurrency also fell under the classic chain reaction, bitcoin sank, losing more than 30 billion USD in an instant, falling to the level of 6,000 USD.
Breakthrough important support
The deterioration of the technical picture was given by the breakout of the BTC support level formed by the $ 7700-7800 area. The cryptocurrency dropped to $ 7200, and after the arrival of new traders on the market before the opening of the American session, pressure increased, which dropped the level to $ 7000.
Mass disposal of longs
The result of the sale was the massive liquidation of longs on important cryptocurrency platforms. According to cryptocurrency analyst Joseph Young (@iamjosephyoung), more than $ 665 million of longs were liquidated on the largest exchange BitMEX. It allows you to trade BTC and other crypto coins with leverage. Simply put, all movements against the trader’s position are multiplied, squeezing it out of the market using a margin call. What becomes the reason for the growth of the fall, increased panic in the market.
Whales drain money
According to the Whale Alert service, which monitors the activity of holders of large accounts, before the sinking of Bitcoin, several large transactions were made to the accounts of cryptocurrency exchanges. For example, an unknown wallet transferred $ 11 million of bitcoins to Huobi. Fixed a $ 10.7 transfer between Binance wallets. The flow of large amounts of money into the accounts of exchanges will lead to increased pressure on the cryptocurrency.
Today it is difficult to predict further price dynamics, but many cryptocurrency experts have hope for an improvement in the situation.