Bitcoin Tumbles: Key Factors Behind the $400 Million Liquidation

The crash of bitcoin led to a massive liquidation of $400 million. As BTC plummeted below the psychological threshold of $41,000, the turmoil spread well beyond the usual circles of crypto enthusiasts. Peter Schiff, a known critic of crypto, did not miss comparing this downfall to a major sports defeat. But what really happened?

Early Signs and Triggers of the Bitcoin Crash

Before this bitcoin crash, signs had already begun to appear. Julio Moreno from CryptoQuant had observed an overheating of the bitcoin price after a significant rally above $40,000.

Furthermore, Mara Pool, a major player in bitcoin mining, chose to sell tokens after a recent peak. This strategic decision to secure profits indicates an attempt to reduce risk exposure.

In addition, more than half of bitcoin holders were in a profit position, a scenario often precursor to a massive sell-off. These elements converged, creating a fertile ground for the crash.

The massive liquidation of $400 million is part of a series of notable events, far from an isolated case. When the market is bullish, as it was for bitcoin, leveraged trading positions are often established. These positions are vulnerable to liquidations in the event of abrupt price movements.

When Bitcoin crashed, these leveraged positions were liquidated, causing a chain reaction in the market. This is a classic dynamic of crypto trading, where rapid increases can also be accompanied by equally sudden drops.

The Impact on the Market and the Investors’ Response

The altcoins, often more volatile than Bitcoin, also suffered considerable losses. Christopher Inks, an experienced trader, still sees a silver lining.

According to him, the recent downturn could just be a short-term correction, suggesting potential gains ahead. Indeed, the current situation could thus be an opportunity for buyers in search of good deals. This dramatic drop raises questions about the volatile nature of Bitcoin and its position in the crypto market. While some view it as a sign of weakness, others see an opportunity to strengthen their positions at lower prices. Bitcoin, despite its fluctuations, continues to attract attention and provoke passionate debates