Bitcoin traders woke up on Friday to see a massive fall in the prices of cryptocurrencies amid a sudden crypto sell-off in Europe. As of Friday afternoon, the price of Bitcoin was below $21,500, which is approximately 9% lower than the price of the coin on Thursday.
The fall was the worse for the digital asset in two months. As usual, Bitcoin did not fall alone. It went down alongside other digital assets, with Ethereum falling over 9%, which saw the coin trading below $1,700.
Although the market looks stable at the moment, the next movement in the market is still unknown, but experts are saying bitcoin has lost its bullish momentum.
No Clear Reason for Crash
The reason for the crash has not been confirmed, but experts are saying it could be a result of a “large-scale transaction.”
“It seems likely that this was a result of a large sale transaction,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said on Friday.
“It’s not showing the pattern of a flash crash, as the assets didn’t immediately rebound sharply but sank even lower in the hours that followed,” he added.
Craig Erlam, a senior market analyst at Oanda, said bitcoin was supposed to recover its losses before a fall in price and that failure to recover its losses “suggests there is substance to the move.”
Simon Peters, another crypto analyst, said there is a close correlation between the US equities and crypto in recent months, which could be a reason for a massive selling of crypto.
“US equity markets have pulled back since Wednesday’s release of the July Fed meeting minutes, the key takeaway being that the Fed likely won’t be finished with rate hikes until inflation is tamed across the board, with no guidance offered on future rate increases either,” Simon Peters, crypto market analyst at eToro, told CNBC.
“With the tight correlation between US equities and crypto in recent months, I suspect this has filtered through to crypto markets and it’s why we are seeing the sell-off. The trend has also perhaps been exacerbated by liquidation of long positions on bitcoin perpetual futures markets,” he added.
The Need to Trade Carefully
Experts have always warned that trading cryptocurrencies are not for the fainthearted. With the latest move in crypto, thousands of traders have already been liquidated, and more danger could be ahead as experts are still unable to predict the next direction for coins.
Many experts predicted a bull run for August. Unfortunately, the market has disappointed even the experts in the market. With an unstable world economy and rising inflations, this is definitely not a time to take unnecessary risks.
“Speculating in cryptocurrencies is extremely high risk and is not suitable for the vast majority of people,” Hargreaves Lansdown’s Streeter said.