- Bitcoin suffered a price crash in the recent crypto market downturn.
- Market analysts are weighing in on the intensity of the price shakeup.
- Several contributing factors triggered the crypto market crash.
The weekend crypto crash splashed a bloodbath across the market, leaving almost no asset untouched in the sudden wipeout of $360 billion within a brief period. Bitcoin took a major hit, falling 14% through key support levels to a 25-week low of $49,300.
Bitcoin’s hard plunge has triggered a wave of reactions across the market, and while the majority has been bearish, others maintain a positive outlook.
Bitcoin Still Bullish Despite Crash?
The recent Bitcoin price crash has raised concerns that hopes for the anticipated bull run might be fading, but recent analysis suggests this may not be true. According to market analyst Rekt Capital, while the retrace is deep enough to shake investor confidence, it does not necessarily signal the end of the bull market.
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Rekt Capital’s analysis hinges on the observation that Bitcoin has recently filled a CME (Chicago Mercantile Exchange) Gap, which might indicate that the recent drop is just a normal correction. This gap refers to the price difference between the closing and opening prices of Bitcoin futures on the CME, which does not operate continuously like the cryptocurrency market.
The severity of the recent correction has, however, created a new CME Gap between approximately $59,400 and $62,550. According to Rekt Capital, Bitcoin needs to reverse its direction and move upwards to fill this new gap, suggesting that the bull market might not be over and a recovery could be on the horizon.
Also weighing in, financial analyst Peter Brandt highlighted that the decline in Bitcoin’s value since the completion of the fourth halving draws parallels to a past cycle. Brandt pointed out that it follows the same pattern as the 2015-2017 Bull market cycle, further indicating that a bull market could still occur as it did in the past.
But what triggered the Bitcoin crash in the first place?
Factors Contributing to the Crypto Crash
The unexpected crash that rocked the crypto market over the weekend was due to a combination of factors, ranging from financial to geopolitical. According to BitMEX co-founder Arthur Hayes, the crash was likely caused by a major firm’s forced liquidation of significant crypto holdings.
While the information remains unverified, comments by Crypto Podcast founder Ran Neuner provided additional context, revealing that trading firm Jump Trading was selling crypto at an unusually fast rate, which was likely due to potential liquidations or urgent financial obligations.
Additionally, the August 4 Bank of Japan’s announcement of a rise in its short-term interest rate and a reduction in monthly bond purchases have been highlighted as potential factors contributing to the crash.
Mounting geopolitical tensions in the Middle East have also been noted as strongly casting a shadow over global financial markets, which likely aided the severe downturn in the crypto market.
On the Flipside
- Several altcoins fared worse than Bitcoin in the weekend crash with losses ranging between 24% to 27%.
- Recent market data has revealed that Bitcoin whales are buying the dip.
- Bitcoin is slowly recovering, trading at $54,948 at press time.
Why This Matters
Investor sentiment following the weekend crash has been largely bearish. However, the recent analysis offers hope to the otherwise grim outlook, potentially restoring faith in Bitcoin and the broader crypto market.
Read more about how Bitcoin’s dominance is shifting following the weekend wipeout:
Bitcoin Dominance Hits 174-Week High Amid Market Meltdown
Discover the division in opinions regarding the Bitcoin crash and opposing comments by this crypto critic:
Peter Schiff Mocks Bitcoin Crash: “HODLers Are In Denial”
