- Bitcoin’s price has bounced wildly in the last 24 hours.
- The volatile price movement has led to significant liquidations.
- Market watchers initially blamed a misclassified Arkham alert for the wild price action.
One of the many reasons people invest in Bitcoin is its relatively high volatility, allowing it to record mouth-watering gains over the years. But Bitcoin’s volatility remains a double-edged sword, as market participants were quickly reminded in the last 24 hours.
Bitcoin’s Wild Swing Amid False Alarms
Bitcoin’s price reached above the $30,000 price point for the first time in a week on Wednesday, April 26, after an over 7% price rally. But the excitement in the crypto markets was short-lived, as the asset quickly gave up its 7% gain in a single hourly candle, dropping close to $27,000, before gradually clawing its way back above $29,000 at the time of writing.
The volatile price swing took out long and short orders in a liquidation spree that wiped out about $361.82 million per Coinglass data, as other crypto assets replicated Bitcoin’s price action.
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While some market participants quickly blamed a misclassified alert on Mt. Gox and United States government Bitcoin sales for the steep price drop, Arkham, the source of this alert, has since debunked this theory.
"Neither the alert nor the tweet could have caused the sharp BTC price drop today, as the drop occurred between 19:17 and 20:01 UTC, and the alerts and tweet were sent afterwards at 20:07 UTC and 20:08 UTC respectively," Arkham said in a Twitter statement.
Arkham is referencing a tweet by “db,” @tier10k on Twitter, who disclosed the alert, which Arkham says db wrongly configured.
In a tweet on Thursday, April 27, Reflexivity Research Co-Founder Will Clemente asserted that recent market volatility resulted from reduced liquidity and growing leverage.
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"For the time being this decreased state of liquidity should cause heightened volatility and less efficient price movements, making operating in digital asset markets more tumultuous for larger players; but also, opportunity for new market entrants looking to capitalize on this decrease in market efficiency," a report shared by Clemente read.
CoinShares’ Head of Research, James Butterfill, told DailyCoin that Bitcoin’s volatility directly correlates with rising prices.
“Interestingly, Bitcoin tends to have much higher volatility when prices are rising relative to when they are falling,” Butterfill said over direct messages. “So every time we see a rally over the course of a few weeks we see volatility spikes.”
On the Flipside
- Bitcoin is still up over 70% in value, year to date.
Why You Should Care
Bitcoin’s price action affects the general market sentiment leading other crypto assets to replicate its price action.
To learn more about Bitcoin’s recent price movements, see this:
Bitcoin Rallies on News of First Republic Bank Troubles, Is There a Correlation?
Interested in the fallout from the Binance.US-Voyager deal? Read this:
Binance.US-Voyager Deal Breakdown Leads to $10M Escrow Deposit Dispute
