After Tuesday’s Bitcoin crash that hit the rest of the market as well, investors are wondering what happened. Alameda Research CEO Sam Trabucco commented that this was the most significant move in months. He was surprised, too, but a closer look at the signs shows that a break-in was to be expected.
But what are the signs that Trabucco is referring to?
As of 9:00 a.m. GMT on Tuesday, Bitcoin was doing well after a seven-week spike that peaked at $ 53,000 that morning. But at 9:00 a.m., a 2% decline to $ 51,600 indicated that the bears were starting to gain the upper hand. It wasn’t until 3:00 p.m. GMT that the tide turned negative. In the hour that followed, Bitcoin fell as low as $ 44,000 before the bulls stepped in, driving the price higher, leaving a large bottom wick on the hourly chart.
From high to low, the leading cryptocurrency saw its price jump 18%. This activity was also supported by a hefty volume that has not been seen since late July.
Analyzing what happened, Trabucco points to a similar pattern in high premium and open interest futures seen earlier this year, before Bitcoin tumbled from its all-time high of $ 65,000.
“It is said that those who do not learn from history are doomed to repeat it.
Who still remembers the beginning of this year? When BTC rose to $ 65,000 pretty quickly, futures had high premiums, and the OI on all major contracts had risen? ”
High premiums refer to the additional return above the risk rate for which investors are being compensated. In other words, the willingness of futures traders to take riskier positions.
Open interest, on the other hand, is a measure of market activity and shows the flow of money in Bitcoin futures. Trabucco says that every time these conditions are met, the inevitable happens: the price falls. This triggers a cascade of sales as the high-risk traders are liquidated en masse with high leverage.
The last time this happened, analysts blamed China’s anti-Bitcoin stance and Elon Musk’s environmental concerns. But this time, Trabucco said, there is no obvious candidate to blame.
Onchain Capital CEO Ran Neuner suspects dirty machinations of the World Bank and the IMF as a message to El Salvador and others who are considering making Bitcoin legal tender.
“Exactly on the day El Salvador introduces Bitcoin as legal tender against the wishes of the World Bank and the IMF, every single major exchange mysteriously crashes at the same time and the price collapses by 20% …”
Proof of text: Cryptoslate