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  • BTC/USD stays under strong bearish pressure.
  • The reasons for the sell-off include speculative and technical factors.

Bitcoin (BTC) lost over $1500 of its value in less than an hour. Once $7,000 gave in, the selling orders started snowballing and took the price of the first digital asset to the lowest level since August 2019. On some exchanges, the coin fell as low as $5,200. At the time of writing, BTC/USD is changing hands at $5,900, down nearly 30% on a day-to-day basis. 

The coin is deeply oversold, but there are no clear signs of upcoming reversal as of yet. The RSI on the daily chart points downwards with a move to SMA200 weekly at $5,500 now a clear possibility. Notably, SMA200 weekly served as a backstop for BTC at the end of 2018 and in the beginning of 2019. The price used it as a jumping-off ground for a sustainable recovery.

What’s behind the crash

The cryptocurrency market is a highly speculative place, vulnerable to FUD (Fear, Uncertainty, Doubt) and emotional trading. This particular characteristic combined with algo trading and flourishing marginal trading often results in flash crashes and exaggerated moves. 

US investors woke up to see BTC sell-off towards $7,300. As new players joined the game and accessed the situation, the bearish pressure increased and pushed the price below the critical $7,000.

BTC longs got liquidated According to Joseph Young (@iamjosephyoung), popular cryptocurrency analyst,Bitcoin longs worth $665 million were liquidated only on BitMEX, the largest cryptocurrency derivatives trading platform. The liquidation of that magnitude might have caused as an additional trigger for the downside move on an already bearish market. The same is confirmed by the cryptocurrency research company Skew:

$500mln+ of XBTUSD sell liquidations just went through on BitMEX.

Finally, Earlier during the day, Whale Alert service reported on Bitcoin worth about $10.7 billion transferred between cryptocurrency wallets of Binance, which means crypto whales and another $11 billion in BTC were transferred from unknown wallet to  Huobi. Huge amounts traveling to and from exchanges imply increased whale activity, which is also often lead to large market movements.

BTC/USD daily chart

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