If you haven’t opened Blockfolio or CoinMarketCap today, you’re in for a bit of a harrowing surprise.
Over the past 48 hours, Bitcoin (BTC) has lost all semblance of a bull trend, failing to react positively to the launch of the much-ballyhooed Bakkt Bitcoin futures contracts.
Since the week’s open at $10,150, the cryptocurrency has shed $1,600, falling under key historical technical supports that are threatening to turn into resistance. This move to $8,600 is the long-awaited bout of volatility that traders have been waiting for since Bitcoin entered a lull in early-July.
Altcoins, too, have taken a beating. The average non-BTC crypto asset is down around 15% in the past 24 hours. Ethereum, for instance, has collapsed to $168, posting a 17% loss on the day; Bitcoin Cash, EOS, Bitcoin Satoshi Vision, and Tron have fared even worse, shedding 20% of their value in a day’s time.
Why is Bitcoin Down?
This dramatic move — which came as there were optimists calling for Bitcoin to break higher to $20,000 — has left many wondering why the Bitcoin price suddenly broke down. A few analysts have answered this pressing question.
Speaking to CNBC, the chief executive of digital currency investment firm BKCM, Brian Kelly, argued that this move was largely one based on technical factors. He explained that once Bitcoin fell below the $9,000 “major” support level, a “wave of selling” was triggered. Indeed, Bitcoin collapsed from $9,400 to $8,000 basically without stopping, accentuating that bears are in control.
Joe DiPasquale, the CEO of BitBull Capital, has argued that this price collapse may have been catalyzed by fundamental factors. He said in his own comment to CNBC that the 15% collapse can partially be attributed to the “lukewarm” launch of Bakkt.
As reported by Blockonomi, the much-hyped Bitcoin futures contracts from the Intercontinental Exchange-backed platform barely garnered any traction during its first trading session, with the product trading less BTC in a day than how much BTC trades in ten minutes on, say, Binance. While Bakkt itself likely didn’t trigger the sell-off, the lack of “institutional herd” rushing to use the product from the get-go likely made negative sentiment fester in the cryptocurrency community.
DiPasquale also touched on the fact that there was recently a sudden decline in Bitcoin’s hash rate, one that brought network security down by a purported 30%. While mining isn’t meant to have a direct effect on the day-to-day price swings of Bitcoin, the loss of hash rate may have been interpreted by investors as a sign of waning Bitcoin interest.
To the surprise of no one, the cryptocurrency community on Twitter has been having an absolute field day with this flash crash.
Prominent cryptocurrency skeptic and gold bull, Peter Schiff, was quick to point out that this move validates his theories that Bitcoin is about to unwind, and fall even further than it did during 2018’s “Crypto Winter.” He wrote on Twitter following the move that Bitcoin’s price action is a “very bearish technical pattern” that only increases the risk for a “rapid descent down to $4,000 or lower”.
#Bitcoin has finally broken below the support line of the large descending triangle it has been carving out for months. This is a very a bearish technical pattern, and it confirms that a major top has been established. The risk is high for a rapid decent down to $4,000 or lower!
— Peter Schiff (@PeterSchiff) September 24, 2019
Despite Schiff’s continued, never-ending skepticism, most investors in this industry kept their heads up high. One prominent commentator going by “Rhythm” reminded his followers that Bitcoin is still at prices seen three months ago — far from the end of the world.
And Michael Goldstein, the president of the Nakamoto Institute, pointed out that Bitcoin’s current price is currently lining up with a long-term price model from prominent analyst PlanB, implying that BTC is technically still in bullish territory.
The current 365 day model price in @100trillionUSD's stock-to-flow model is $8,285.https://t.co/o52XCFso13 pic.twitter.com/29OPJGHSDm
— Michael Goldstein (@bitstein) September 24, 2019
Whether or not that will remain to be true remains to be seen. But, we should have an answer in the coming days.
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