Bitcoin experienced a dramatic $ 10 crash early Sunday morning, triggering over $ 000 billion in liquidations in the last 10 hours. What could have caused the fall?
Bitcoin has been at its peak all week and was hoping to hit a new all-time high soon. However, on Sunday morning, traders were awakened by liquidation notifications as more than a million positions were liquidated as BTC fell almost 15% in value.
There is usually less volatility in the market on weekends as traders take a break from trading. However, on Sunday, Bitcoin made its largest daily move in recent weeks. As a result, it became the largest liquidation event since March.
What could be the reason
So far, nothing can be confirmed as to what led to the mass liquidation. Several potential causes were noted as possible causes.
Unconfirmed speculations indicate that the US Treasury may be charging multiple financial institutions for money laundering using cryptocurrencies. So far, this has not been officially reported anywhere. The news went viral on Twitter.
Another possible reason is related to a potential decrease in the BTC mining hashrate. Network analyst Will Wu suggests a power outage in Xinjiang was the cause of the price drop.
Wu explains that the drop in hashrate is similar to the one that happened in November 2017. Wu believes that the correlation between the fall in the price of Bitcoin and the fall in the hash rate is the reason for the flash failure that occurred on Sunday.
Just the end of the bull market
Although there are various possible reasons for the fall, earlier this week, the Pi cycle top indicator blinked for the first time since 2017.
The indicator usually shows when the market reaches its top. Consequently, the beginning of the fall could be expected at these levels.
BTC / USD chart In 2021, the cryptocurrency market has grown significantly. General market capitalization grew by more than 200% in four months.
Potential pullbacks are always possible and Sunday proves that corrections are expected after extended periods of bullish momentum.