On yesterday’s trading day, there was a sharp slump in the price of Bitcoin and the main altcoins in the crypto market. For example, BTC/USD initially reached highs of around $ 53,000 in the morning, the best value since May this year. But then it went down rapidly within a few hours.
In just a few hours, the price in the top fell by more than $ 10,000 to lows of below $ 43,000. This means a slump of almost 20 percent in this short period.
Bitcoin crashes from $ 50,000 to $ 43,000 in 2 hours
The price was particularly volatile between 16 and 18 o’clock Central European time. Between 4 and 5 p.m., the price already lost around 7 percent from over $ 50,000 to just above $ 46,000. Between 17 and 18 Clock followed another extreme correction in which it went below the 43.000 Dollar. Financial experts speak here of a so-called flash crash, when prices collapse so rapidly within a very short time.
However, in this price range, Bitcoin has initially found strong support. A rebound led the price back to a level of $ 47,500. However, at the time of publication, the price has already weakened and is trading around the range of $ 45,500.
Most Violent BTC Correction since Corona crash
Such a sharp price movement for the Bitcoin has not existed for a long time. Even the correction in May of this year from the all-time records by $ 65,000 was not as fast and strong as yesterday’s trading day. Similarly violent eruptions were last observed during the corona crash in March 2020, in which the price had even collapsed almost 40 percent within a day.
But the corona crisis may not have played a role in the correction this time, as the financial markets have been unimpressed by the pandemic for a long time and reached new all-time records. This applies not only to the prices of Bitcoin and Ethereum and Co, but also to the stock market. Thus, both investors of cryptocurrencies and buyers of shares have experienced an incredible rally since March 2020.
Stock markets show stability
But the stock markets currently seem to be more robust, like the crypto market. Because a comparable correction is not to be seen there. Although the German stock index Dax or the American S&P 500 have also declined slightly this week, but the minimal losses are not comparable to the crash of Bitcoin and Co.
A valid reason for the enormous drop in the price of Bitcoin can not be identified so far. However, the event coincides exactly with an actually positive event for the lead currency. Yesterday, a new law came into force in the Central American state of El Salvador, which establishes Bitcoin as the official currency in the country next to the US dollar and also pretends to merchants, to accept Bitcoin as a means of payment in the future.
Failed premiere for BTC as currency in El Salvador
Kryptoszene.de reported yesterday in detail about the quite controversial decision of the government and its possible consequences for the country and the worldwide adaptation of Bitcoin as a means of payment.
However, the inhabitants of El Salvador may have imagined the” holiday ” differently. In an advertising campaign, the government had recently promoted the purchase of Bitcoin and the download of its own wallet, even offering an incentive of $ 30 in Bitcoin.
But who bought BTC yesterday for larger sums, should now be frustrated first. Because the enormous price drop may cause the new investors massive losses. Especially in the small country with a low income level, even relatively small losses may not be easy for the inhabitants of El Salvador. Yesterday hardly serves as a confidence-building measure for the acceptance of Bitcoin in the country.
El Salvador has just bought it’s first 200 coins.
– Nayib Bukele 🇸 🇻 (@nayibbukele) September 6, 2021
Government buys BTC for millions of dollars after
But the state government of El Salvador is apparently quite unimpressed by the price slide and operates on the principle of “buy the dip”. Thus, the country bought 150 bitcoin for about 7 million dollars, thereby significantly increasing its holdings. Previously, El Slavador had already bought $ 20 million worth of BTC at an average price of $ 50,000.
So far, however, the bill of the already heavily indebted country does not work. At the current price level, investing in BTC is likely to be a significant loss business for the government. It can only hope that prices will rise again soon and that there will be no further dramatic price losses.
Criticism has already come from the World Bank about El Salvador’s significant investments in Bitcoin. From there it was said that this strategy would not be supported in any way. Bitcoin is absolutely non-transparent as a currency and the climate balance is catastrophic, the World Bank said.
Whether El Salvador will score a dramatic own goal with its Bitcoin strategy or the Pacific state will end up feeling like a laughing winner remains to be seen. Because it is still by no means clear how the Bitcoin price will continue to develop.
Bitcoin crashes on first day as El Salvador’s legal tender https://t.co/3PbPuKIHBy
– BBC News (World) (@BBCWorld) September 8, 2021
Blow – off top scenario: start of the bear market?
Some experts are already calling for the start of the bear market for Bitcoin after yesterday’s price slide. According to her assessment, it could be a so-called “blow-off top”. This chart scenario is characterized first by a rapid rise in a price and then by an extremely rapid correction.
From the point of view of technical analysis, it could indeed be such a scenario. Because Bitcoin has risen massively from under $ 29,000 to just under $ 53,000 within a few weeks. An increase of more than 80 percent in just over a month. And also the currently violent correction fits exactly into the image of a blow-off top. So far, this price trend has been symptomatic of the end of every bull market of Bitcoin. After a steep climb, a sharp correction followed.
Also for this reason, many analysts had not yet proclaimed the bear market in May 2021 when BTC corrected down from the all-time high of $ 65,000. Because the crash was actually too slow for a typical blow-off top and the price pattern on the daily chart looked more like a “crown” than a blow-off top, which is characterized by a steep top of the price.
Analyst: More than $ 100,000 still Possible in 2021
However, it is still too early to see the bear market as confirmed. For this, the correction must also be steady in the next days and weeks. However, analysts such as the well-known trader Plan B are convinced that Bitcoin can still reach further records of well over $ 100,000 in 2021. He had priced in a correction for September 2021 as possible in the analysis of his stock-to-flow model, but expects an extreme bull run from October.