- Bitcoin seems to have stabilized after a quickfire $10,000 correction
- Bitcoin temporarily lost 20% of its value in just a couple of hours, but regained almost half of that
- Leverage trading caused the huge spike, with $3.5 billion liquidated
Bitcoin has begun to stabilize after a $10,000 correction that temporarily wiped $500 billion off the value of the cryptocurrency market. After spiking from $52,600 to $42,600, Bitcoin has since settled around the $46,00 region, suggesting that this was nothing more than a combination of a natural cooling down after a monumental run from $29,000 and a ‘sell the news’ event surrounding El Salvador’s adoption of Bitcoin as a legal currency.
Writing Was on the Wall
The writing was on the wall for Bitcoin, not just because it had enjoyed a near constant upward move from $29,000 to $52,000 in August but because of its inability to push past that critical barrier. These factors, plus the ‘sell the news’ event that was #BitcoinDay as El Salvador began accepting it as legal tender, all acted like a hammer blow:
The savage move saw Bitcoin spike down to a 20% loss, with over $3.5 billion liquidated on leverage trading sites in the 24 hours surrounding the event as those who were long at $52,000 were ruthlessly punished. Having known the precise date at which El Salvador would start accepting Bitcoin for three months, the chances of such an event on the day were astronomically high, especially after Bitcoin’s run from the end of July. And, of course, there’s the September curse to bear in mind.
Bitcoin Holders Used to Such Swings
When it comes to such resets, the wick of the move isn’t too important as this usually just liquidations, but it is where the price rests after such a move that matters. In this matter, Bitcoin actually only suffered an 11% correction, which is a typical bull run pullback. Indeed, when you take out the wick and look at the chart since July things really don’t bad at all – Bitcoin is just back where it was a week ago :
Those who have been in the crypto game for a while won’t be batting an eyelid at yesterday’s events. They will know that this is what Bitcoin does – it corrects sharply, often further than needed because of over leveraged traders. We have seen such drops dozens of times before in bull runs, and they always result in a slow and steady recovery back to previous levels.
Of course we can’t rule out further downside action, but as long as it doesn’t close the day below the $40,000 mark there is no reason to think that this is anything more than a typical bull market correction, and a chance to stock up!