Bitcoin (BTC) has dropped suddenly this morning, as the cryptocurrency slumped in price by nearly $400 in under 90 minutes according to data from CryptoCompare:
Dropping from a price of nearly $7,390 at 9:35 UTC this morning, BTC dropped to a price of $6,993 – a drop of over 5% – before making a slight recovery to edge over the $7,000 mark once again, before dropping again to $6,983 at the time of writing.
The first time bitcoin has dropped below the significant $7,000 mark since August 31st, it is unclear precisely what has driven this sudden slump – although several possibilities might explain the drop.
What’s Driving the Slide? Volatility, Mini-Bull Run, Liquidations, CNBC ‘Counter-Trade’
Looking at the twelve month chart for bitcoin volatility might offer some insight with respect to the sudden slide – as periods of low volatility often precede price movement – with BTC volume dropping to its lowest for 12 months at 8.4% PA, according to CryptoCompare data:
In addition, the drop also follows a nearly two week minor-bull run which – as can be seen from the price graph above – often results in subsequent slumps.
Moreover, a quick succession of long-liquidations on cryptocurrency exchange Bitmex has no doubt contributed to the selling pressure, which may have well contributed to the sudden slump. According to datamish $242.8 million BitMEX long contracts were liquidated in the last 3 hours, as this Twitter feed shows:
Finally, what has come to be known as the CNBC ‘counter-trade’ phenomenon – might also be at play.
The somewhat tongue-in-cheek indicator advises that traders should often take positions against the predictions of CNBC, as they have consistently been proved wrong in the past. This morning it seems, proved to be no exception:
Much wow pic.twitter.com/Wvd5J0YKiC
— CNBCIndicator (@IndicatorCnbc) September 5, 2018