Analysts believe Bitcoin could see a second ‘flash dump’

Cryptocurrencies had a bad week. Bitcoin and Ethereum saw their values fall significantly, and analysts believe that there could yet be another crash

By · Aug 8, 2020 . 4min read

Bitcoin could see flash dump

The cryptocurrency market experienced its biggest crash since Black Thursday on the 13th of March. Bitcoin and Ethereum lost 15% and 22% of their values, respectively, in a mere five minutes. Bitcoin’s price crashed by $1700, while Ethereum fell by $90.

The crash took the entire Bitcoin market by surprise. Around $1 billion of liquidations took place on margin exchanges, indicating that portfolios had not accounted for such an event. Margin exchanges mainly offer loans to investors so that they can carry out more trading than their current finances allow.

Analysts believe that the two leading causes for the crash have to do with the fact that a) it occurred on a weekday, where liquidation in the market is much lower than on the weekends, and b) a few highly-leveraged players quickly liquidating their assets, causing a domino effect.

There is also a growing concern amongst investors and analysts alike that the Bitcoin market could go through a crash like this again very soon. One such investor is an individual with an excellent track record with Bitcoin. He has two accounts on the BitMEX Leaderboard, having amassed gains above 25,000%+.

The analysis is done; however, it ignores the fundamentals and considers only the technical aspects. At a time when governments around the world are injecting record amounts of stimulus into the economy, the intrinsic value of scarce assets will naturally strengthen. This is because fiat currency is becoming cheap, and is unable to hold its value with stability for the time being. Along with Bitcoin, gold has also had an excellent year. Its value has reached record highs. It is going through a bit of dull period right now, but the fundamentals remain strong.

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