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Today, the price of Bitcoin (BTC) dropped by 19% in a single hour to $6,000. For a few minutes, the crypto king even dipped below the $5,500 level on Binance and $5,200 on BitMEX. While it's still too early to say what happened and what we should brace ourselves for next, some things are already becoming clear.
Liquidations know no mercy
Today the Bitcoin (BTC) price collapse has been the most severe since the onset of 2018. It has already exceeded the January 16, 2018 and June 27, 2018 massacres with their 16% and 14% respective losses by a wide margin.
What is clear is that this tremendous drop followed huge liquidations of Bitcoin (BTC) longs on main crypto derivatives exchanges. Ryan Selkis, founder of the top-level blockchain analytics team Messari, reported that $665M in Bitcoin (BTC) longs were liquidated on BitMEX today.
According to some calculations, the total volume of longs liquidated across multiple platforms may exceed $2.25B. This bloodbath may also correlate with the sell-out of 'Satoshi Funds' that occurred yesterday when wallets with mining rewards from 2009 and 2010 sent 800 Bitcoins (BTC). This was noticed by the automated parsing systems.
Additionally, as U.Today reported, wallets on the top crypto exchanges Binance and Huobi moved $21.7 M in Bitcoin (BTC) before the dramatic drop, which might have been a bearish red flag.
Is this the bottom?
That's the question traders across the globe are asking themselves. Typically, such drops are balanced by double-digit surges shortly after. Some traders suggested that the price of Bitcoin (BTC) is testing the 200-weekly MA. Should the orange coin fail to stay above it, it will be an uber-bearish indicator.
According to CoinMarketCap, Bitcoin (BTC) has performed the best of all of the top-10 coins. Bitcoin Cash (BCH), Bitcoin SV (BSV) and Tezos (XTZ) holders suffered the most.
Overall fear on the crypto market could soon be replaced with huge greed, but many investors recommend not making decisive moves in times of uncertainty and volatility.
All in all, we see no clear evidence that $6,000 or even $5,500 are bottoms for this bearish rally. So, we need only to give the markets the chance to cool off and, maybe, wait for a vaccine against COVID19.