Flash Crash in the Crypto Market: What Happened and What Comes Next?
In the past 24 hours, unprecedented market movements have been witnessed. Just yesterday, a potential crash was discussed with the commencement of US futures trading and the opening of Japanese markets. Today, massive corrections were observed. This article explores what led to the current market crash, the current situation, and what should be monitored moving forward.
The Market Crash
Last night, as Japanese markets began trading, the market experienced a significant downturn. Bitcoin dropped below $50,000, a level last seen in February of this year. This drop has left all recent Bitcoin Spot ETF buyers, including those from BlackRock, underwater. Bitcoin touched a local low of $49,350 before slightly recovering. However, volatility remains extremely high.
The current crash has increased Bitcoin’s dominance to nearly 48%, comparing Bitcoin’s market capitalization to the entire altcoin sector. Bitcoin has fared better than altcoins, which have seen a complete bloodbath. Ethereum (ETH) experienced its most significant daily loss since May 2021, and the overall market is in a state of fear and panic. A cascade of liquidations worth over $1 billion occurred within 24 hours, with Ether Futures alone accounting for over $300 million in liquidations, affecting over 200,000 traders.
The Role of HTX (Huobi)
A significant focus has been on HTX (Huobi). Recently, an analyst on Twitter highlighted the massive increase in Open Interest on Huobi. A trader began building massive Futures positions worth around $1.2 billion. Rumors suggest that these positions might be linked to Justin Sun, CEO of HTX Global, though he denies these claims.
Jump Trading’s Influence
Jump Trading has also been active, selling over 120,000 wrapped Ether (WST ETH) worth almost $500 million in recent weeks. This large-scale selling, particularly over the weekend when trading volumes are low, has significantly pressured the market. Since Jump Trading began offloading their positions on July 27, the market has corrected by approximately 33%.
Market Indicators and Predictions
The MVRV ratio on a 30-day average for Bitcoin has fallen to its lowest point since November 2022, indicating that Bitcoin is currently as oversold as during the depths of the last bear market. Funding rates show many bearish bets, and the CVD spot volume justifies these bearish positions due to massive spot sales.
Geopolitical and Economic Factors
It is crucial to monitor traditional markets and geopolitical events. Should Bitcoin continue to face pressure, the next target ranges are around $46,500, followed by $42,000 and $40,000. However, it is uncertain if Bitcoin will reach these levels.
Conclusion
Despite the severe corrections, it is essential not to panic. The fundamental data for Bitcoin and the crypto market remain strong, but macroeconomic crashes can still apply pressure. It is hoped that this is an overreaction driven by fear and panic. If the situation escalates, a reassessment will be necessary, and preparations for further sell-offs should be made.
Market participants should stay calm, manage their emotions, and avoid succumbing to fear and panic. Despite the challenging market environment, best wishes are extended for a great start to the week. Updates will be provided if significant developments occur. Readers are encouraged to leave comments if additional updates are desired.
