Bitcoin (Bitcoin) An analyst believes that due to the large-scale liquidation of leveraged traders and borrowers, it plunged by $9,000 in a few hours on Tuesday.
In a series of tweets on Wednesday, Willy Woo tried to find the root cause of BTC/USD Fell to a low of $42,800 Tuesday.
Woo: Bitcoin margin borrowers and open positions may be the culprits
with Rumors spread Regarding who is behind the sharp drop in Bitcoin prices, analysts have been processing data to understand the starting point of the plunge.
Woo said that analogies to the March 2020 crash triggered by coronavirus measures are everywhere, but Tuesday’s events showed major differences.
“The leveraged market has been sold off, but investor buying has become stronger,” he said Summarize.
“The BTC flash crash was caused by deleveraging. The COVID crash was similar to the overreaction of derivatives, but it was supported by investors at the time. This is a completely different and a mystery. Cheap coins.”
Woo subsequently suspected that the decline was due to margin borrowing and open positions. In the classic domino effect, positions are closed to produce a “cascaded” liquidation and positive feedback loop, which seriously affects the spot price.
Typo. The open interest is not too high, it is within the normal range.
— Willy Woo (@woonomic) September 8, 2021
“Healthy and Clean”
Although the process involved may be complicated for ordinary observers, the strength of Bitcoin’s rebound and continued investor purchases show that the indifference of coin holders is not involved.
related: Gold correlation shows that Bitcoin’s sharp decline from $50,000 is related to the strengthening of the U.S. dollar
According to the data from the on-chain monitoring resource Whalemap, new large investors entering the market provide the vast majority of seller pressure.
“So yesterday we sold. Researchers said that the move was very violent and a large number of Bitcoins were sold in the spot market. Tweet There is also a chart next to it, showing where these parties have obtained BTC.
“But who is selling? Not HODLers. Mainly whales, in fact whales who have only recently bought Bitcoin.”
At the same time, for analyst William Clement, Tuesday brought a welcome reset to the bubble derivatives market.
“Intensified investor activity + disappearance of leveraged speculators = health and cleanliness,” he in conclusion Together with the discovery of Woo.