Crypto Markets Bleed as Bitcoin Loses a Week’s Gains in 15 Minutes

Despite the recent price drop, Bitcoin is still up over 76% in value, year to date.

A bleeding man standing in front of a huge fire creature.

The crypto markets have enjoyed a significant rally in 2023, with several leading crypto assets printing double-digit percentage gains from year to date. Still, there have been red days, and today looks set to be one of them.

Bitcoin Experiences a Flash Crash 

On Wednesday, April 19, Bitcoin (BTC) erased gains made earlier this week in a single 15-minute candle, dropping from $30,000 to retest the $29,000 price point, representing an over 3% drop. 

Historically, the broader crypto markets follow Bitcoin’s price action with even steeper percentage declines. This case is no different—for example, Ethereum (ETH) is down 6.34% over the same period, trading once again below $2k at the time of writing.

What catalyzed the latest drop in Bitcoin’s price is not immediately clear, but market watchers have highlighted several plausible reasons. 

What Caused the Flash Crash?

First, the United Kingdom’s March inflation data, released by the Office for National Statistics on April 19, showed stronger inflation than economists had projected. The Consumer Price Index (CPI) rose 10.1% from March last year, while economists had predicted a 9.8% rise, increasing the chances of more interest rate hikes from the Bank of England.

K33 Research’s Vetle Lunde highlighted a sharp decline in open interest in Binance’s BTC/USDT perpetual contract as another potential catalyst. Lunde did not respond to a request for comment.

Highly followed crypto Twitter trader “Skew” disclosed that 16k BTC (worth approximately USD 467.6 million) was sold on Binance with similar-sized sell orders on other spot crypto exchanges.

CoinShares’ James Butterfill told DailyCoin that Bitcoin’s latest price action was a surprise as U.S. housing data suggested that it would be “prudent” for the Fed to ease up on rate hikes. Instead, the dollar has appreciated while Bitcoin’s price has declined.

"Housing starts and building permits were both weak yesterday suggesting more accommodative policy would be prudent. It therefore surprises us that the market prefers the USD to Bitcoin. There has been little movement in the futures market to indicate reasons for the move too. We dont [don't] see any clear factors to attribute this but it is quite with the normal volatility range." Butterfill wrote.

What’s Next for the Market Leader?

Skew asserted that Bitcoin’s flash crash could form a new “local low” at $29k provided no major bad news hits the market. In this case, the trader predicts that the price could bounce to take out short traders.

Skew further emphasized that sell orders of this magnitude on Binance typically precede bad news. The trader urged market participants to monitor funding rates, open interest, and spot market buying.

Popular crypto Twitter trader “Muro,” highlighted that Bitcoin is trading in an ascending channel, cautioning that a breakout below could be bad.

Another prominent crypto Twitter trader “Duo Nine,” highlighted the same channel on Monday, April 17. The trader’s chart indicated that Bitcoin could drop to $25k if it failed to find support around $28k.

On the Flipside 

  • Despite the recent price drop, Bitcoin is still up over 76% in value, year to date.
  • Bitcoin’s Fear and Greed Index is 63, indicating bullish market sentiment.

Why You Should Care 

Flash crashes indicate a sharp decline in liquidity often triggered by fear of increased risk.

Read more about Bitcoin’s recent price action here:

Bitcoin Surges Back Above $30K Following Positive CPI Data 

Learn about Russia’s Crypto push here:

Russia Close to Adopting Crypto in International Trade

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Okoya David

David Okoya is a crypto news reporter at DailyCoin based in Nigeria. He covers various topics related to the cryptocurrency industry, including exchanges, regulations, and price movements, and strives to bring fresh angles to breaking news. With experience as a freelance crypto news writer, David upholds the highest journalistic standards, telling complete stories and answering lingering questions whenever possible.