Reasons for the rise in the price of bitcoin to $ 12,000 and decrease to $ 10,500

Early on Sunday morning, the price of Bitcoin exceeded $12,000, but immediately after that it collapsed by 12%. BTC is currently tradingabout $ 11,150. We figure out what caused the growth and collapse of the market.

Flash Crash

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Currently the price of bitcoinstabilized, somewhat pulling up the entire crypto market; the largest cryptocurrency by capitalization changes hands on average at a price of $ 11,300. However, during the sudden rise and fall of the price that occurred on Sunday morning, trading positions of more than 1 billion dollars were liquidated on various exchanges.

“Over the last 24 hours, 72&#8217;422 people lost everything on the crypto market”, &#8212; Crypto market data provider Bybt reports.

The analysts add that the largest liquidation order, worth $ 10 million, was placed on the Bitmex exchange, known for its high-leverage trading.

Margin trading problems

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Leveraged tradingallows traders to take larger positions with smaller amounts of capital. Almost all crypto exchanges today offer this option as it has become the norm in the crypto market in recent years.

Traders open positions by actually doingbets on the future price, if successful, the profit turns out to be disproportionately large to the size of the deposit, but in the case of an incorrect forecast (even a price change of 2-5%) leads to a complete loss of funds.

The rise in bitcoin prices last week attractedinterest in the crypto market from retail traders; many cryptocurrency exchanges are reporting the highest trading volumes since the beginning of the year as impatient investors tried to catch the market rally.

Whale games

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Cause of massive liquidations (flash crash)it did not become clear immediately, but some suggested that the collapse could have been triggered by the so-called "whales", which control a large number of bitcoins, moving the market in their favor.

Financial analyst Francis Coppola concluded succinctly:

"Whales are playing."

In favor of this opinion, it is indeed easier for whales to move the market when trading volumes on the crypto market are lower, such as early Sunday morning.

A sudden change in the price of bitcoin thatresulted in a loss of over $ 20 billion in value from the total market capitalization of the cryptocurrency market, according to CoinMarketCap, was observed with shock and fear from the community.

"Bitcoin &#8212; the most ruthless asset in the world,— stated crypto investor Anthony Pompliano on Twitter.

Bitcoin reached $12,217,000, and then fell by $1,217,500 in half an hour. Not for the faint of heart".

Asylum asset demand

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Bitcoin's rally last week, breakingThe almost three-month period of stagnation is also explained by the fact that global investors were looking for so-called “safe haven assets” with a low level of risk, such as gold, which recently exceeded $2,217,000.

Naming possible reasons for the market movement, Forbes quotes trader Mick Erstling:

&#171;Markets are being driven by ongoing coronavirus concerns as well as trade tensions between the US and China, which also help explain gold's meteoric rise.

Even so, gold is still up 28% for the year compared to Bitcoin's 50%.

"The push in bitcoin price is driven by the desire for safe haven assets",” concluded Erstling.

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