Bitcoin and cryptocurrencies have collapsed — what's going on?
Bitcoin fell sharply on Sunday morning below $51,000, losing about $8,000 (13%) in 20 minutes.
The decline began at the beginning of the trading day, when the first cryptocurrency fell below $60,000.
Bitcoin has been losing more than 10% since the beginning of the day. Altcoins decline even more: Ripple (XRP) has collapsed by more than 20%, Litecoin losses are approaching 20%.
The result of these movements was the liquidation of $9.12 billion in traders' positions over the past 12 hours. Bitcoin accounts are about half of the total value. During the day, the volume of liquidations reached $9.81 billion, which was the largest value in the history of the crypto market.
The number of liquidated traders is estimated at more than a million. The scale of today's movement was largely influenced by the cascading liquidation of long positions, which is also evidenced by the sharp change in funding rates for futures on negative values.
On Friday, the hashrate of the leading bitcoin mining pools fell sharply amid problems with the supply of electricity after explosions and flooding in coal mines in several provinces of China.
Popular trader Ton Weiss, suggested that this news caused a panic in the market. He himself called this moment a good time to buy an asset.
Analyst Willy Wu notes that the price and hashrate of Bitcoin have always been correlated, so the fall is associated with power outages in China.
Larry Cermak, head of research at The Block, disagrees with these conclusions, suggesting that the reason for the drop was the natural exhaustion of the market and disappointment with the price of the Coinbase listing.
In the network, meanwhile, rumors are spreading that the US Treasury Department is preparing to charge several financial institutions for money laundering through cryptocurrencies. The source of the information is called lawyers who are familiar with the plans of the working group of US Treasury Secretary Janet Yellen.
A lawyer specializing in cryptocurrencies, Jake Czerwinski, considers this information unreliable.
The sharp growth of Dogecoin and other altcoins in recent days is a worrying sign for the entire market as a whole, as it indicates that at this stage after the successful direct listing of Coinbase, everyone who wanted to buy BTC has already bought it.