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Bitcoin Price Sinks $1000 Slipping Below $8500, Who Is to Blame?

Bitcoin sees a massive 15% price drop in a flash crash on Tuesday, as the world’s largest cryptocurrency slips below $8500. Analysts point at the waning institutional interest and slow launch of Bakkt.

Over the last one week, Bitcoin price is facing downward pressure as the world’s largest cryptocurrency slipped below its crucial support of $10,000 earlier this week on Monday, September 23. However, the fall on Tuesday was even more ruthless as Bitcoin price tanked $1500, nearly 15%, in a flash crash.

On Tuesday, Bitcoin slipped from a high of $9798 to making an intraday low of $8370 as per the daily chart on Coinmarketcap. At press time, Bitcoin is 12.72% down, trading at $8541 with a market cap of $153 billion. In the last 24-hours, Bitcoin lost over $20 billion of its market cap.

Citing an anonymous source, CoinDesk reported that this price crash was due to margin calls and contract liquidations occurring on BitMex exchange. BitMex is a Seychelles-based crypto exchange popular for offering 100x leverage to its customers. Leverage is like a loan given to traders to multiply the size of basic investment, 100 times in this case.

All the margin calls were recorded by the data platform DataMish. Moreover, the BTC price chart also shows the formation of a long squeeze. This is a situation where even the long term investors or HODLers feel compelled to sell resulting in a further downward tailspin.

Fall In Institutional Interest

Although the CME Bitcoin Futures saw a huge institutional interest over the last few months, data provider Skew Markets has a different story to tell. A chart presented by Skew Markets shows that institutional interest for CME’s Bitcoin Futures has tanked from $1.6 billion in June 2019 to now at under $300 million. The data provider says that the institutional interest was at its peak when Facebook released the Libra whitepaper.

On the other hand, several crypto analysts point their fingers to Bakkt‘s slow start of Bitcoin Futures contracts launched earlier this week. As reported by Barrons, Mati Greenspan, senior market analyst at crypto trading platform eToro, said:

“The catalyst for today’s plunge, in my mind, seems to be the underwhelming launch of Bakkt. This is a prime example of “buy the rumor, sell the news”.

Alex Mashinsky, CEO at Celsius Network, a crypto lending and depository company, also mentioned:

“The disappointing Bakkt opening signals to the crypto community that institutions are less ready to invest in BTC at scale than was supposed, which means the price was probably too high and due for a correction. What we’ve just seen is short-sellers and momentum traders piling on to make things worse, and now here we are back at support.”

Joe DiPasquale, CEO of Bitbull Capital said that in addition to Bakkt, Bitcoin’s latest price drop is because of several technical and fundamental factors as well. He stated:

“Bitcoin’s recent price drop is a result of technical and fundamental factors, including a breakdown of the consolidation range, Bakkt’s tame launch of futures, and a sudden network hash rate drop”.



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