TL; DR
Full story
Bitcoin hit a new all-time high of $69,093.28 (hurrah)!
Then it promptly dropped back to $59,323.90, taking the rest of the market with it (boo)!
Here’s ours attempt with the left bend to ‘bend the middle’with a guess at what happened:
The longs took profits, while the shorts piled on.
(Look at us talking the mid-curve talk).
This is what that means:
Longs take profits = the people who had bet that the price of BTC would go up decided to sell.
Shorts are loading = a whole group of people bet that the price would fall – by: borrowing BTC → selling it → and wait/hope to buy it back at lower prices → pay back their loan and keep the difference.
“Cool cool cool. But how come they all decided to do this at the same time?”
Traders like to reinforce their decisions by looking for repeating chart patterns.
(I.e. “BTC has done X around this price in the past, so there is Y% chance this will happen again.”)
But once BTC broke its all-time high, we were in uncharted territory (with no patterns to keep traders safe and warm) – so many of those with long positions would have sold for $69,000.
Then, knowing that this would likely be a widespread practice…
Many of those same traders would have set up automatic short sales to trigger at the same price – leading to a double whammy of long/short sales that (almost immediately) drove the price down.
Why aren’t we concerned?
In February, Bitcoin experienced its largest price increase in a single month throughout its history. That’s a WILD violent new record for a ~$1 trillion asset.
At these rates, a price correction was well overdue (and if it recovers, the rest of the market will likely follow suit).