Photo: Tim Reckmann / Flickr
Bitcoin had experienced low volatility consolidation in recent weeks. However, the consolidation phase was ended abruptly with a violent drop of almost 10% on October 23 to fall near a 5-month low. At 12:50 UTC, the flagship cryptocurrency plunged by around $500 in 15 minutes to hit a low of $7,500.
Bitcoin price reached the lowest level since June 10 as recorded by Bitstamp. After showing mild signs of an upward trend above $8,000, the leading digital token dropped steeply to just below $7,500 where it is still hovering around currently. The global average of BTC price was also not spared hitting a low of $7,549.
With that abrupt drop, the market capitalization of Bitcoin also dropped to $135 billion. A significant move was overdue as BTC’s volatility had plummeted to a 6.5-month low of 2.58% earlier on October 23. The crypto was majorly trapped within a trading range of 8,500 to $7,850 since the start of the month.
As we reported earlier, the Bitcoin price was struggling to hold above $8,000. Thus, many commentators were convinced that a downward move was imminent. The token had experienced the strongest selling pressure since February. Many expected the consolidation to end with a bullish breakout since the technical charts reported signs of seller exhaustion near $7,850.
On the contrary, the range-bound movement of the Bitcoin price has ended with a severe downside move maybe as a result of the massive long squeeze that was reported on Twitter by @WhaleCalls. A long squeeze comes about when price drops force the long holders to unwind their positions adding to a downside pressure that results in steeper losses.
The Trend
Notably, the yearly high also registered in June and Bitcoin has now lost almost 45% of its value since then. But, it has nearly doubled in value since the start of 2019. The range breakdown now exposes support at $7,430 which was a multiple daily lows level in June. Currently, Bitcoin is struggling to break above the $7,500 level losing over 6% in the past 24 hours.
Other major cryptocurrencies were not spared by Bitcoin’s spiraling crash. They lost between 4% and 9% with some shadowing bitcoin’s movements. Binance Coin is losing over 7.5% while Litecoin is losing over 6.5%. However, some of them have recovered better than Bitcoin with Chainlink the only token in green among the top 20 gaining over 3% in the past 24 hours.
BitMEX Liquidation
Whenever Bitcoin encounters these rapid plunges, the leveraged traders hurt the most. On the BitMEX platform, trades worth millions of dollars were liquidated by this plunge following what has now become a pattern.
After the latest drop, the buy trades worth more than $200 million got liquidated on BitMEX. Just after an hour since the BTC price plummeted by over $500, the value of the longs that had liquidated on the platform stood at a staggering $211.7 million as reported by Datamish.
This plunge coincidentally comes when Bakkt trading volumes have hit a record high. Today, the trading record stands at 347 BTC for the coming month of November.
Is Mark Zuckerberg Responsible for this Crash?
The plunge came as the Facebook CEO Mark Zuckerberg testified in the U.S. Congress over the social media company’s efforts to launch its Libra cryptocurrency. So far, there has been severe opposition from U.S. lawmakers and governments throughout the world.
As we highlighted earlier, Zuckerberg said that he would pull Facebook out of Libra if things do not proceed properly. The appearance by the Facebook CEO in this Congress hearing may further increase regulatory scrutiny on cryptocurrencies.
