Bitcoin just took a massive hit where it dropped from $7400 to $6400 in a couple of hours, below a number of explanations that could have triggered this event.
Goldman Sachs backs out
Initially people started to talk about Goldman Sachs dropping their plans to set up a trading desk.
However, it appeared this wasn’t that big of a news to affect the market so badly. More so, this news came out ‘before‘ the actual crash happened, which fueled insider trading stories.
Silkroad wallet becoming active
Another news site reports that there was activity on the Silk road wallet that contained 111,114 bitcoins in May 2014 (worth $800 million at the time).
This wallet was inactive for four years. Seeing someone move 11,114 BTC to Bitfinex, and another 4421 BTC to Binance, good for more then $110 million is rather odd.
Mass manipulation through shorting
An unidentified trader shorted 10,000 BTC this past Sunday, good for another $74 million.
The total amount surged to 37,500 BTC in short positions. that on itself is another reason for a major correction.
On top of that, there was an AI that tracked unusual behavior. It turns out there was a large spike in social activity which appeared fake according to the RoninAI team, an AI-based crypto signals platform.
The good news is that if people take short positions worth 37,500 BTC is that at some point they will buy back in, pushing the price higher, or so is being argued.
Its easy to blame shorters, or a rather insignificant Goldman Sachs news, but there’s more.
A lesser used indicator named the TD sequential already predicted this crash, see screenshot below:
It has to be said that no indicator can predict a crash but with all factors taking into account, it could definitely be the trigger, strengthened by a series of other events.
When this indicator reaches the count of nine, as you can see on the 4-hour BTC/USD chart it is time for a correction to take place.
Fair enough, indicators like StochRSI, RSI, WR, and others indicated an over bought market, and the growth was becoming weaker for the past 24 hours so eventually it was bound to happen.
Its unfortunate most traders had $7500-$7600 in their mind, as that’s the point where two important trend lines crossed, as well as the 50-EMA on the weekly chart at $7550.
The daily chart hasn’t reached over sold conditions yet so this crash could continue, towards $5800, that would be the third time to visit that price point, making it increasingly likely we will break through that support line, on our way to $5400, and then $5100.
Before that happens we do have one last support line residing at $6250, making this a crucial point to test, if that doesn’t hold it would definitely clear the way to the deepest drop we’ve ever witnessed this year.