Why Bitcoin Suddenly Crashed | The link to other currencies

Published:
Updated:
Category:

News

bitcoin_september_price_crash_thumbnail

The cryptocurrency scene has been quite shaky last month. In August, mainly Bitcoin and Ethereum have registered drastic price changes.

Drastic Price Changes

On September 5th, the bearish trend continued. Multiple currencies registered significant lows for two consecutive days. This is one of the most drastic movements to occur this year in the space. Is this the beginning of yet another crypto winter?

Many coins including Ethereum dropped by roughly 10 percent in early September. At some points this month, bitcoin fell bellow $10,000. This trend marked a reversal in the price hike that occurred earlier this year.

What caused this trend?

Market experts have analyzed Bitcoin's behavior and came up with a host of reasons that caused it. The latest price movements are linked to both fundamental and technical factors.

Three reasons attributed to the rapid price changes have been published by Medium. Ki Young-Ju, CEO of CryptoQuant pointed at miners and blamed their sales. Some like to call them whales because of the large amounts of coins they hold.

Mr. Ki noted that miners tend to transfer large amounts of Bitcoin to exchanges. Big sell offs like that can drastically affect the bitcoin price by starting a reaction. The large sales exerts massive pressure on currency traders and lead to drastic price changes.

At higher levels, other factors can drastically affect the price of cryptocurrencies. Fluctuation in the value of the US dollar is probably related to the drastic price events too. An article published by Cointelegraph analyzed this correlation.

The US dollar has been declining for the last four months. Now that the currency started recovering, the price of both Gold and Bitcoin is falling.

Kiana Danial, A memver of Ivest Diva commented on the situation. She mentioned that the recovery of the US dollar affected bitcoin negatively. Tim Enneking of Digital Capital management had a different argument.

The Ethereum Effect

On the 2nd of August, Ethereum displayed rather unusual behavior. It's price fell by 25% within 5 minutes. The price was initially at $418, before falling as low as $300. After the crash, the coin mainly recovered to $385.

Experts observed the situation and were surprised. All of this price action happened within 15 minutes. This behavior serves as a critical lesson to investors in the cryptocurrency industry.

Crypto experts have linked the weird behavior to a combination of two factors. The first reason has to do with the price resistance. For the last three years, the resistance was ranging between $410 - $420. The second factor is a big sell-off that occurred at the time. The sell-off started a reaction, making the price fall bellow the resistance and crash.

Another important factor to note is the link between Ethereum and Bitcoin. Bitcoin also witnessed a price drop that was caused by rapid sell-offs of over $1 billion. Reports claim that the latest liquidation is the largest one to occur since March 13. On that day Bitcoin fell to as low as $3,600.

The Ethereum price drop is thought to have affected Bitcoins price. This is only proven by the fact that bitcoin recovered and is back above the $10,000 mark.

Looking back, in June of 2017, the price of ethereum skyrocketed. From about $90, the price rose to surpass the $400 mark. This rally took place before the record braking $20,000 bitcoin price hike.

Leave a comment

Captcha