- Traders taking excessive risk in the bitcoin market being forced to sell when the price goes down were the bigger culprits for last week’s 30% drop in bitcoin prices, according to analysts.
- Bitcoin traders liquidated roughly $12 billion in levered positions last week as the price of the cryptocurrency spiraled, according to bybt.com, a cryptocurrency futures trading platform.
- “Selling begets more selling until you come to an equilibrium on leverage in the system,” says JMP’s Devin Ryan.
Bitcoin’s aggressive moves are being driven by much more than the next China crackdown or Elon Musk headline.
Traders taking excessive risk in the unregulated cryptocurrency market being forced to sell when prices go down were in large part responsible for last week’s 30% drop in prices and outages for major exchanges, according to analysts. A burgeoning bitcoin lending market is also adding to the volatility.
The price of cryptocurrencies tanked last week, with bitcoin losing roughly a third of its value in a matter of hours. Bitcoin popped to nearly $40,000 on Monday but is still down about 33% from its high.
Chinese bitcoin traders still in control
- Chinese bitcoin traders continue to thrive despite Beijing’s four-year crackdown on cryptocurrencies, experts told CNBC.
- China shut down local exchanges and banned initial coin offerings in 2017, but this year, there have been renewed fears of a harsher crackdown from authorities.
- Bitcoin’s price has been impacted by recent comments from industry bodies and regulators regarding cryptocurrency in China.