The 3 Reasons the Crypto Market Dumped
John Barry | Sun Apr 18 2021
A severe dump impacted the whole cryptocurrency market on April 18th, these are 3 of the factors that caused this movement
1. Coal mine accident in the Chinese Xinjiang region causes power outages, resulting in a Bitcoin hashrate decrease in the entire network of 21%.
News of this travels slowly, as there is a delay between the hashrate issue and the price decline of cryptocurrencies. As the Wu Blockchain tweet came out on April 16. Onchain analytics reports were certainly delayed with this information.
2. The FXHedge tweet of rumors that multiple financial institutions performed money laundering using crypto
The Cryptocurrency Market reaction to this tweet was fast, as Bitcoin and many altcoins dumped quickly. At the time of the tweet Bitcoin was trading ~59,600; already down about $2,000 from the daily high. Some seemed to believe this rumor before the tweet came out. Bitcoin proceeds to dip down to a low price of $51,239 on Coinbase. A decline for the day of over $10,000.
Many Altcoins had larger percentage declines. For example $AAVE sent from a daily high of $450 to a low of $314 on the Gemini Exchange a 30% dip. Many altcoins hit their lowest price in April during this broad dip.
Can we be sure this rumor is really true ? Investigating a single firm of money laundering takes time and a large commitement. To hear multiple investments firms are being charged at the same time ? Seems like a stretch. How big are these investment firms ? Reading this rumor makes a person jump to the conclusion it would be major firms, I doubt this will be the case, I have no idea.
3. The unexpected downturn causes liquidation of many long positions.
Over $10 Billion in long margin positions get liquidated. Turning a broad cyrptocurrency dip into a mini cryptocurrency crash. This tweet and picture by Coin Bureau shows an accurate picture.
The Bitcoin Price Chart below shows the sequence.
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