In the last week alone, the bitcoin price climbed from $9000 to almost $14,000, which corresponds to an increase of about 52.5%. Then came a hard flash crash and within 15 minutes the price declined by more than $2500 within 15 minutes.
How does such degeneration happen?
The awareness of Bitcoin increases with each market cycle. People are aware of the impressive rallies in recent years, especially those in 2017. The ever-rising bitcoin price is responsible to forget the general fear and puts the performance in the strong market phases in the foreground. Investors also want to get some cake and invest this time. The price continues to rise and fuel this market psychological effect, which a stock market wisdom expresses with the slogan: “The bull market nourishes the bull market”.
According to Coinmarketcap, the Bitcoin price is at $12133.71. Bitcoin now meets again the $12,000 – $12,170 area (37.9% Fib retracement ) as the nearest insurgency zone. The following level is nearly $12,500 before touching the $13,000 region. Cutting the current 2019 high at $13,880 would possibly to transfer Bitcoin to the $15,000 territory since there is not much resistance, involving the next points at $16,450 – $16,650, $17,400 (January 2018, high), $18,000, $19,300 and $20,000 – the contemporary all-time high from December 2017.
The main drivers are now only the rising prices and the hope for profits. As more and more people enter the market who are not interested in the fundamentals, such as how Bitcoin works, social benefits, etc., the rise is more and shakier.
With the rising price, there is also a lot of pressure on the seller side. Experienced traders know that the increase can not last forever and they try to determine the best moment to sell. They pull their stop-loss orders closer and closer to the price. Then, when a wholesale sale takes place, their stop-loss orders trigger and sell the positions automatically, further lowering the price and triggering further stop-loss. So the course can drastically break in minutes.
Media reported that the decline yesterday was mainly because of Coinbase. On June 25, a large Bitcoin transaction was floated on the stock exchange. It is quite possible that a whale saw the time to realize profits.
What does a flash crash mean?
One should always be aware that the crypto market offers the greatest opportunities but also the greatest risks. Flash crashes are completely normal in lively market phases. What rises quickly, can also fall quickly. In the worst case, it can also trigger a trend reversal and the collective fear of loss again exceeds the collective greed. How strong the market really is, you will see only after a flash crash.
Of course, the ups and downs can cause great stress and it brings large profits but also great losses. Therefore, it is always advisable to invest only what you can lose, even if the lure is still so great. An introduction to the matter is an advantage. If you are convinced of the technology, you may be able to watch the market more closely. After all, the price does not change the fundamentals.
Disclaimer: This information should not be interpreted as an endorsement of any cryptocurrency. It is not a recommendation to trade. The crypto market is full of surprises and overhyped assets. Do your research before buying anything. Do not invest more than you can afford to lose.
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Disclaimer: The authors of this website may have invested in crypto currencies themselves. They are not financial advisors and only express their opinions. Anyone considering investing in crypto currencies should be well informed about these high-risk assets.
Trading with financial products, especially with CFDs involves a high level of risk and is therefore not suitable for security-conscious investors. CFDs are complex instruments and carry a high risk of losing money quickly through leverage. Be aware that most private Investors lose money, if they decide to trade CFDs. Any type of trading and speculation in financial products that can produce an unusually high return is also associated with increased risk to lose money. Note that past gains are no guarantee of positive results in the future.
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