Bitcoin, after rising higher this week, suffered a sudden slump, losing around $ 1,500 from its price in minutes.
The bitcoin price broke $ 12,000 per bitcoin on the Luxembourg-based Bitstamp exchange early Sunday morning only to plummet 12% to $ 10,500 within an hour.
The price of bitcoin has now gone back, somehow pushing the wider cryptocurrency market with it, to trade at around $ 11,300, but not before more than $ 1 billion of bitcoin and cryptocurrency positions were liquidated through various exchanges.
“72,422 people have been liquidated in the past 24 hours,” said Bybt, data provider on the bitcoin and cryptocurrency market chirpingAdding the largest single liquidation order, worth $ 10 million, occurred on the Seychelles-based Bitmex exchange, known for its high volume of leveraged trading.
Leveraged trading allows traders to take larger positions with lower amounts of capital, with the number of bitcoin and cryptocurrency exchanges offering high leveraged trading that has exploded in recent years. Traders take positions, in fact they bet, on where they expect prices to be when their position “closes”, losing their capital if the market goes against them.
The rally in bitcoin prices this week drew a wave of retail traders in the cryptocurrency market, with many bitcoin exchanges reporting highs since the beginning of the year as enthusiastic investors attempted to seize the recovery.
The cause of the flash bitcoin crash was not immediately clear, however some speculated that it may have been caused by the so-called “whales” that control large quantities of bitcoins and other cryptocurrencies that move the market. The market is more easily moved by whales when trade volumes are lower, such as early Sunday morning.
“Whales are playing,” asked financial writer and commentator Frances Coppola chirping.
The sudden move in the price of bitcoin, which caused the cancellation of over $ 20 billion in value from the combined market capitalization of the world’s cryptocurrencies according to CoinMarketCap data, was observed with a combination of shock and awe from the community of bitcoin and cryptocurrency.
“Bitcoin is the most ruthless resource in the world,” said Anthony Pompliano, bitcoin and crypto investor chirping.
“[Bitcoin] reaches $ 12,000 and then drops to $ 1,500 in minutes. Not for the faint of heart. “
Bitcoin’s rally this week, breaking its almost three-month commercial malaise, was attributed to global investors seeking so-called low-risk assets, such as gold, which came a short distance from hitting $ 2,000 for first time this week.
“The push for Bitcoin was fueled by the push for safe-haven assets,” said Micah Erstling, bitcoin merchant and GSR cryptocurrency producer, via email.
“Markets are driven by continued coronavirus concerns, as well as by trade tensions between the United States and China, which also helps explain the meteoric rise in gold. Even then, gold is still growing by 28% for l year, compared to 50% of bitcoins. Perhaps bitcoin is satisfying the narrative of becoming an all-encompassing, risky, safe deflationary resource. “