Bitcoin is volatile again, but it’s a free fall instead of a rocket launch
- Prices recovered to $26,301 at the time of writing, but the gains made by the mid-June rally were reversed.
- Analysts equated the selling pressure to the aftermath of the FTX collapse and the U.S. banking crisis.
After weeks of staying frozen, Bitcoin [BTC] finally came to life during Thursday trading hours. However, instead of taking off towards the skies, the king coin crashed down to the ground.
How much are 1,10,100 BTCs worth today?
BTC falls from a cliff
The most popular cryptocurrency witnessed one of its sharpest price drops of 2023, falling to as low as $25,000 on 17 August. Although prices recovered to $26,301 at the time of writing, the gains made by the mid-June rally had been effectively erased.
Bitcoin’s implosion led to carnage in the broader crypto market. The global market cap plunged 7.42% in the last 24 hours, per CoinMarketCap data. The total crypto volume exploded 81% to $67 billion in the last 24 hours, indicative of the intense wave of selling.
In fact, a popular on-chain analyst equated the ongoing situation to the aftermath of the FTX collapse and the U.S. banking crisis – two of the most bearish events in the crypto market in the last 12 months.
The selling pressure is similar to the #FTX collapse and the silicon valley bank crisis.
— Maartunn (@JA_Maartun) August 17, 2023
The analyst’s observation was based on the Net Taker Volume indicator, which plunged deeper into the negative territory. It is calculated by finding the difference between the Taker Buy Volume and Taker Sell Volume. Negative values reflected that the market was dominated by sellers.
Whales dump, but others bought the dip
A sizable chunk of whale investors contributed to the selling pressure. As per data from on-chain research firm Santiment, transactions involving more than $1 million BTC surged to levels not seen in the last month.
In reality, transactions began to pile up even before the meltdown, when BTC fell below $29,000 on 16 August.
Interestingly, the number of wallets storing more than 10 BTC didn’t witness a large drop. This possibly explained that some holders utilized the dump to fill up their coffers. Further examination of user cohorts corroborated this assertion.
The number of addresses holding between 10-100 BTC tokens increased by 70 over the last 24 hours. Moreover, at least four more wallets were added to the 100-1,000 user cohort.
A big chunk of discussions on crypto-related social media involved the mentions of “Buy the Dip.” The phrase-cum-strategy is used by investors, which involves adding to an existing long position of a fundamentally strong asset.
? After #altcoins spent the past week bleeding, #Bitcoin finally had its own implosion… and took all of #crypto down with it. Prices are rebounding slightly, but this dip was enough for the crowd to call for #buythedip at the highest level since April. https://t.co/SwBU58tnqr pic.twitter.com/O65Hs0w8VM
— Santiment (@santimentfeed) August 17, 2023
Volatility is back
The latest turn of events injected the much-craved volatility into the market, viewed as both a USP and a bane, depending on how you look at the crypto landscape.
According to on-chain tracking company Glassnode, the 1-week realized volatility for the king coin soared to a month high. Such a bout was last seen after XRP’s win in the legal tussle with the U.S. Securities and Exchange Commission.
The surge in volatility led to increased interaction with centralized exchanges. Inflows to trading platforms, which had reached historic lows prior to the event, also reached a one-month high. In fact, the transfers made to exchange addresses have been in a steady uptrend since the beginning of the week.
The derivative markets were also swept up in the tornado of extreme volatility. According to a post by Coinglass, long positions worth more than $843 million were liquidated over the last 24 hours. However, as people bought the dip and prices recovered, bearish leveraged traders suffered as shorts worth $196 million were wiped out.
Overall, liquidations worth more than a billion were witnessed in the market at the time of writing.
— CoinGlass (@coinglass_com) August 18, 2023
Is your portfolio green? Check out the BTC Profit Calculator
As the prices crashed, the market sentiment shifted to one of fear, as per the latest reading from the Bitcoin Fear and Greed Index. This was a sign that investors were worried and could dump more of their holdings in the days to come.
The market mood turned to fear after two months of hovering in the neutral zone.