Today will go down in the history of the cryptocurrency market as the day of the fastest possible collapse and price recovery. In just 14 hours, Bitcoin crashed from $ 42,000 to $ 30,000 and came back. Ether and other altcoins also went into the “red zone”, but are recovering more slowly.
Bitcoin has not been able to bounce up from the $ 42,000 level, which it had been at for several days, to its previous highs. On the contrary, it touched $ 30,000 in just a few hours, but immediately rushed up, and by 19:00 returned to the morning levels. Thus, the intraday fall and retracement was 40%. This is the fastest possible price movement in one day, moreover, it is two-way.
BTC surges could not but affect altcoins. Ether also dropped to $ 1,888, although in the early morning it was worth around $ 3,200. But along with bitcoin, the ether recovered, although somewhat less – up to $ 2900. The third cryptocurrency in terms of capitalization, Binance Coin (BNB), showed the strongest collapse among the leading cryptocurrencies, falling from $ 500 to $ 280, that is, almost twice. By the evening, BNB managed to recover to $ 410.
At the same time, the capitalization of bitcoin for a short time fell below $ 600 billion. By 20:00, the total capitalization of the cryptocurrency market amounted to $ 1.77 trillion, of which $ 742 billion falls on bitcoin. Bitcoin dominance climbed slightly to 42%.
The market crash has led to congestion on many cryptocurrency sites, including CoinGecko and CoinMarketCap. The Binance cryptocurrency exchange was also forced to suspend the input and output of ETH and ERC-20 tokens due to the congestion of the Ethereum network. With traders in a rush to sell ETH and tokens, the average transaction cost on the network increased to 700 gwei.
For all the scale of the panic that happened, there were no particularly weighty reasons for it. In addition to the “herd instinct” of traders and trading bots, the appearance of the “May 19 trough” was caused by several negative news that happened in recent days. The main pressure on the cryptocurrency market was exerted by the next statement by Chinese regulators to ban the use of cryptocurrencies as a means of payment, which was introduced by the Central Bank of China in 2017. Self-regulatory organizations have warned investors against cryptocurrency trading. Tesla CEO Elon Musk recently played a role in the market decline, who last week decided not to use Bitcoin as payment for Tesla’s electric vehicles, citing environmental concerns about mining. One of the MEPs also added fuel to the fire, calling for the restriction of mining in the EU.
However, even all this news taken together could not serve as a fundamental reason for such a large-scale fall, which was confirmed by a very rapid recovery in quotes. It is quite possible that the real reason for the sales was the exchange manipulations of large players, which led to the “massive psychosis” of trading bots and massive triggering of stop-losses.
In any case, today’s events will give crypto skeptics a reason to talk again about the high volatility of cryptocurrencies and their unsuitability for the role of a stable financial instrument. Moreover, even after such a serious upward rebound, the inertia of the fall may persist. Analyst and trader Piter Brandt
considersthat the current state of the market resembles the situation in 2018, when after the insane growth of bitcoin and altcoins followed by many months of “crypto winter”.
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