Bitcoin is temporarily back from the stagnant period but not with exactly good news. BTC lost about $240 in price in a period of 30 minutes today wiping off approx. $4 billion in market cap.
Bitcoin was experiencing a ‘freeze’ period where volatility hit the lowest in almost an year. The price curves were rising and falling in a restricted spectrum giving investors no clear sign to invest in or dump the stock.
The reasons for this free-fall, like other random hypes and flakes, is speculative. It could or could not be one of these three reasons:
—Reaction to news about regulations or security breach
—Investor bots that cause domino effect trades
—Crypto whale movement in wallets
Short term investors keep check of news and developments about cryptocurrency sphere as markers to dump or double down on investments. A positive news can cause instant stock buying while a security breach causes short term investors to dump stocks, keeping the wheels rolling. For example an ETF approval (in near future) will cause investors to jump on the stock resulting in an increase in price and market cap.
Investment bots are algorithms that execute trade automatically based on analysis of small time periods.They analyse patterns and micro invest on stocks that fulfill certain factors or markers of growth. Trading bots can usually be set to follow investors that have a verified credibility in market or have remarkable profit returns. The draw back: A cash out from the central investors can trigger a multitude of bots to follow similar pattern, dumping cash, causing more bots to follow until the stock crashes like a set of dominoes.
Whales in cryptocurrency are the wallets that hold a very large number of assets stashed away. Any movement in the wallet causes the market to speculate if the whale is looking to dump or not by making it to any exchange causing mass cash outs, triggering the domino effect.
Perfectly following the concept of digital asset ties, explained here, Bitcoin felt awkward going down alone. So it took the top 10 players in the market with it.
Was today’s rejection of pattern an indicator of BTC’s pulling up from its stagnation period? Is the curse over or is the fall down a random stock jerk? Is another bullish/bearish run looming on the horizon? We can only guess.