Crypto Market Sees Sharp Reversal, Rally In Chinese Stocks Be the Reason?
The crypto market has seen another red chaos over the past weekend. The world’s largest cryptocurrency bitcoin first saw a climb above the $4,200 mark on Sunday Feb.24, but fell back under $3,900 later at night, with the abrupt downward movement occurring in half an hour.
Bitcoin was trading at over $4,100 in the daytime on Feb.24, which was seen by many investors as a bull signal; while all of a sudden, at 22:04 (UTC+8:00), it began to drop and fell below $3,900 shortly in half an hour, down about 10% from its mid-day high of $4,210. Other major cryptos like Ethereum, Ripple and Litecoin also took a hit, seeing over 10% drop in price and large amount wipeout from their market cap.
Regarding this big move, many crypto investors were surprised thinking it was a visual bug at first sight. While for bitcoin futures traders, both shorters and longers, it is a loss that they fail to expect amid the prolonged bear market.
“From $3,500 to $4,150, my 20x futures account was wiped out in the early morning.” a trader posted on 8btc Forum at 22:20 Feb.24. But he didn’t expect that at the time when he was editing the post above, the bitcoin price is moving in the opposite direction immediately after the climb, which forced many long positions to be wiped out as well.
According to data from Bicoin, a crypto alert app, number of short positions has increased hurriedly by 36.53 million USDT (approximately US$36.53 million) merely in an hour on the very early morning of Feb.24.
Several reasons have been put forward for the sharp market reversal. Some Chinese investors claim that it was manipulated by some large futures funds; others point to the rally in Chinese stocks which draw investors who are exhausting over the sluggish crypto market to retreat from the crypto space to the bullish stock market. While it seems they are not that correlated as the cliff happened at the time when the Chinese people were sleeping and the crypto market has come back to calm on the following day. As of press time, bitcoin is trading at $3,835, at which price level the cryptocurrency has been hovering around on Feb.25, according to Coinmarketcap.com.
No one knows exactly the logic behind this abrupt market reversal, just as crypto analyst Joseph Young commented on the ever-changing market,
“There is no market that is as unpredictable as crypto.”