Bitcoin has been getting a roller coaster of a week, climbing to nearly $ 60,000 over the weekend before coming down on Monday.
The price of bitcoin fell as low as $ 44,850 per bitcoin on the Luxembourg-based Bitstamp exchange, down 20% from the high, before falling slightly back on the news of payment company Jack Dorsey Square
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Traders and analysts have been scrambling to explain the sudden decline in bitcoin prices, with data showing a higher meltdown of bitcoin futures contracts with a significant discount. ‘tinderbox’ ignites, causing panic to spread through the market.
The price of bitcoin dropped from nearly $ 60,000 per bitcoin to around $ 45,000 in just a short time … [+]
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“The bitcoin market was like a tinder box waiting to spark,” cryptocurrency trader and author Glen Goodman says via Twitter DM, citing bearish comments from Tesla
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The total value of bitcoin tokens 18.5 million in circulation exceeded $ 1 trillion for the first time last week before sales took about $ 100 billion off the market.
“Traders had borrowed large sums of money to buy bitcoin futures contracts, promising that the price of bitcoin would continue to go up,” Goodman said.
When the price of bitcoin fell following Musk’s comments, some $ 1.68 billion worth of bitcoin futures melted down Monday, according to cryptocurrency market analysts at Arcane Research using data from Bybt.
When traders borrow to go “long” on bitcoin futures, with a bet that the price will rise, it pushes flat rates on bitcoin and cryptocurrency exchanges, Goodman explained.
“Their interest payments on that loan went up,” he said. “On Saturday, the largest crypto exchange, Binance, reached an annual rate of 144% per annum. That is clearly volatile, so the market was ready for a spark to thin out the price and the borrowers’ trading accounts as well. many. That way, the interest rate on a loan could return to normal. “
Data showed that $ 1.68 billion worth of bitcoin futures melted Monday as the price fell. … [+]
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Looking ahead, it is thought that the price of bitcoin could remain depressed for some time after this week’s set.
“I wouldn’t be surprised if we run for a while,” Bendik Norheim Schei, head of research at Arcane Research, said via Twitter DM. “Many have been severely penalized this week and the market may need some time to overcome.”
“Flat rates are back to normal now so the pressure valves have been completely released,” Goodman said. “There is no technical reason to keep the sale going, but once fears come in, anything can happen. It all depends on how many bitcoin holders there are. panic and how many manage to keep their zero. “