As a seasoned researcher with years of experience in the volatile world of cryptocurrencies, I have witnessed my fair share of market fluctuations – some gentle waves and others, like this recent Bitcoin crash, resembling tsunamis. The 10% flash crash on Dec. 5 was a stark reminder of the high-stakes game that is Bitcoin trading.
On December 5th late trading, Bitcoin‘s price plummeted to approximately $92,980. This decline occurred after it nearly reached an all-time high of $104,000 on Coinbase earlier the same day.
A sudden drop in Bitcoin’s price by about 10%, resulting in a loss of approximately $10,000 per unit, happened due to yet another instance of forced selling triggered by excessive leveraging.
BREAKING: #Bitcoin briefly falls -$8,000 in 90 minutes to a daily low of $92,000.
Bitcoin has since rebounded +$5,000 off of its low but continues to trade in volatility.
— The Kobeissi Letter (@KobeissiLetter) December 5, 2024
BTC Flash Crash
As a crypto investor, I was thrilled when the world’s media outlets announced that Bitcoin had reached an all-time high of over $100,000 for the first time, marking my return to five figures!
Analyst ‘lowstrife’ noted an intriguing point after the move, stating that exchange-traded funds (ETFs) failed to mirror it in any way.
“This was entirely a spot bitcoin move driven by, you guessed it, leverage.”
If a few unconventional traders in Asia can impact the market like this, imagine the scale at which Saylor might affect it if he ever had to sell his cryptocurrencies to cover debt repayments? That’s a significant difference, he pointed out.
Adam Back, a pioneer in the Bitcoin field, pointed out that there was “far too little market-making activity” and went on to say, “Even a few minutes with a 4% difference between IBIT and the spot price of BTC, really now?
A fascinating analysis after this action reveals that Exchange-Traded Funds (ETFs) failed to mirror it altogether. Instead, this was purely a direct Bitcoin transaction, fueled predominantly by the use of borrowed capital, or leverage.
— lowstrife (@lowstrife) December 5, 2024
Over the last 24 hours, as a crypto investor, I’ve witnessed quite an eventful period. Based on Coinglass data, a staggering number of 163,587 traders have faced liquidation, with the total estimated loss exceeding $900 million. Interestingly, around 80% of these losses were from long positions. This underscores the importance of careful risk management in the dynamic world of cryptocurrency trading.
Towards the end of the workweek, a steep drop was observed that wiped out a significant amount of leverage in the market. However, other cryptocurrencies did not experience the same dip, and the bullish sentiment on the long-term crypto market remains robust, according to crypto derivatives provider Greeks Live.
Following the dip and adjustment, the asset has once again fallen into its usual price band, a pattern it’s maintained since mid-November.
As I’m typing this, at the start of Asian trading hours on a Friday morning, Bitcoin was being exchanged for approximately $97,600.
Bitcoin ETFs Still Bullish
It’s clear from the data we’ve seen that Bitcoin ETFs remained stable even when traditional Bitcoin markets experienced a sudden reduction in leverage.
Yesterday, Bitcoin ETFs in the U.S. gained strong traction, attracting a combined total of approximately $748 million. The BlackRock IBIT fund was at the forefront, taking in around $751.6 million, while Grayscale’s GBTC saw an outflow of about $149 million, as reported by Coinglass.
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2024-12-06 10:21