What Could Have Caused Bitcoin to Flash Crash On Sunday?

[Gozie51]

It is clearly due to correction. The run wasn't supported enough and leads to sudden dump but I guess it would be long enough before it bounce back.

Yes correction could be responsible. Although correction is usually caused by many factors which either continuous bull can be one of them and price can just start dropping as investors start going out. It can also be traders watching out for support and resistance areas. In instance, price couldn't sustain itself around $64,000 and I think when that happened, many investors start taking an impatient decision to sell. Another factor may be a little kind of manipulation by whales to dump and wait for a sloppy downwards move.

[stompix]

There were two main theories I saw.
One was that mining rates dropped due to flooding in China which temporarily took out ~10-30% of the total hashrate.

I don't buy this theory.
The hashrate drop started somewhere Friday, just one day after the retargeting, it was visible on every graph on Saturday and nearly all in the users knew about it the drop, it was pretty obvious, so why would the sell-off start 24h later and be just an instant crash with no prolonged repercussions?
The situation in China hasn't stabilized yet, the fees are through the roof, all the trigger elements in this scenario are still there and affecting the network yet the price is recovering even with no indicator that the entire hashrate isn't done for.

Although I don't like the manipulation theories at all and usually I try to toss them aside a huge sell to wipe out all those long positions by somebody who had a lot to gain from might be a better scenario. I don't think it's that simple, I don't like it but there is nothing else, all the other events are simply too far away from a timing perspective.
 

[grabpopcorn536]

I think the power outage in China caused the value of Bitcoin to collapse. I don't think the power outage event at a mining cluster was the main cause. It could be that hedge funds or sharks shook hands to sell Bitcoin and crash the market on Sunday. They just needed a reason to act together, that was part of a planned conspiracy. We are the ones who are led and always explain facts.

[wxa7115]

Hi,
I am confused about the sudden dump of cryptocurrencies. can anyone explain that why this happen on Sunday?

Most of the time the most simple explanation is the correct one and I think most of this situation can be explained by just the supply and the demand, the volume was kind of weak during the last weeks and once a new all time high is reached that is when the price is the most exposed to a reversal.

Then when the reversal was happening many investors were caught using too much leverage and some of their positions were forcefully closed by exchanges, this in return made the price to go lower which created another series of margin calls producing a domino effect which created a crash in the process.

[SaShiRaJaVu]

In instance, price couldn't sustain itself around $64,000 and I think when that happened, many investors start taking an impatient decision to sell. Another factor may be a little kind of manipulation by whales to dump and wait for a sloppy downwards move.

This is the over all picture that the price could not sustain those levels but what triggered are the sudden drop in hash rate and then there was a rumor surrounding in social media groups that the US is planning to go after investors who are using the cryptocurrency market to launder money and for a rallying market to go into a minor correction mode these things are more than enough.

[oHnK]

there's absolutely no explanation for the price movement.  It's all about investor sentiment--the demand portion of the supply & demand curve.  Sometimes people just sell a lot of bitcoin when there aren't enough buy orders to keep the price afloat and what happens?  Bitcoin drops.  I've learned to just accept the fact that bitcoin is crazy volatile and very unpredictable.  That's what makes it fun!

It is true that the price of Bitcoin moves based on demand and supply, but still the high demand and supply can be caused by many factors, one of which is a growing issue or just a price correction.  Not only news in the US, even in local news reports in my country consider this decline to be the impact of several cases that have been described by others.  However, the case which is the most interesting but not very significant effect on the price of Bitcoin is the case of the Turkish government which banned BTC as a means of payment.  This is the case that has happened frequently and many countries have implemented it so in my opinion this will not have enough effect on the overall price.  Are those who have 20% of BTC are only Turks so they can move it massively.

[Oasisman]

Bitcoin network clogged could be one of the reason why people are rushing to sell their coins, but the network clog happened due to the electricity outage for the mining farms in China due to some kind of accident and which is expected to resume in couple of weeks by that time only we can see the transaction fee to be lowered and so called people will start using bitcoins again for any purposes other than holding.

Probably it's not gonna be the main reason. I mean why would someone sell off their Btc during network clogged where tx fees are so da*n high.
China's electricity incident pretty much causes the network clog as there were a huge Btc mining farm where it was situated when the incident happened, that causes a hash rate drop.
But there are still several relevant reasons for the sudden sell off that remains unknown. Nevertheless, everyone in crypto space is just speculating.

[Twentyonepaylots]

I believe it is the tweet about the US Treasury a couple of days ago that started this dipping. People got consumed by the fear of losing their earnings and have since dipped out. A domino effect ensued where people that haven't seen the tweet still sold their assets because the coin is dumping and they wouldn't want their holdings to depreciate in value. Things like this have been going on with bitcoin ever since it was created so this is nothing new.

[pixie85]

Like others said the main reason is profit taking and it coincided with some rumors of a bitcoin ban in Turkey which did not help with a swift recovery.

This is not a rumour but wrong information, the government didn't ban the bitcoin Turskish central bank did and they don't have huge influence in the crypto market for this price correction. And the exact reason is China's mining farm so let's imagine what will happen if miners stopped working all of a sudden the price could drop but once they resume to be available then everything will become normal.

So you're blaming China exclusively for the drop? Does it mean that in your opinion there would be no correction after a new all time high if there was no news from China?

I don't agree with this as we had similar correction after the first ATH of 58000 and there was no negativity in the news. No wrong info about Turkey and no Chinese miners selling.

IMO active traders are usually responsible for every drop that is smaller than 10% and it has a lot to do with low liquidity on exchanges. You don't need a lot of money to push price down especially now when so many coins leave exchanges because people are holding.

[Kasabus]

Profit taking, after traders make some money, they will buy again and the cycle continues. So if you have a friend who is an experienced trader, you will have a pretty good chance of a free meal. 

The horror would be if the price dump once more. Traders who recently did a long position on BTC would get shaky.

Yes i think this is more of a healthy correction that is inevitable once the price have seen to be in a continuous surge. So i don't see it as a big flash crash because this is bound to happen particularly in a volatile market. If others see this correction as big threat, expert traders considered this one as another opportunity to start buying again.

[Princejebs]

A healthy market need a healthy correction and I think the Sunday crash didn't come by surprise,i was expecting it though I don't know why it's a surprise by others probably because they are so bullish on the market.
Every bull run has its time and I don't see much steam this bill run again, if you also observe MACD, it seem there is going to be a crossover sell pressure on bitcoin chart, the weekly one precisely.
Elon musk (Tesla) shares also drop during the weekend, I think that also contributed to the sharp decline.

[Quidat]

Profit taking, after traders make some money, they will buy again and the cycle continues. So if you have a friend who is an experienced trader, you will have a pretty good chance of a free meal. 

The horror would be if the price dump once more. Traders who recently did a long position on BTC would get shaky.

Yes i think this is more of a healthy correction that is inevitable once the price have seen to be in a continuous surge. So i don't see it as a big flash crash because this is bound to happen particularly in a volatile market. If others see this correction as big threat, expert traders considered this one as another opportunity to start buying again.

When it comes to market correction then expect that situations like these are bit common where it can really be tied up.Cant be considered to be healthy one yet it can be still on the manipulative
side of things but situations like these isnt something new into this market where events and news like these can really make out some impact on the entire market.
Inspite for you to see these things to be on negative side then why we cant just see this as an opportunity for us to enter the market on much cheaper compared into those
almost 60k price peak?

[jaysabi]

There were two main theories I saw.
One was that mining rates dropped due to flooding in China which temporarily took out ~10-30% of the total hashrate.

The second reason was due to a funding rate indicator on leveraged positions that said there were a lot of longs open and a high funding rate for shorts (meaning short term shorts were paying people to open them and leave them open). I assume that could then build into a bias if the market starts to get a bit stagnant.

Why would the mining rates dropping affect the price though? I don't follow the connection between a drop in mining rates and price. Ostensibly, the mining rates follow the price, in that when the price goes up it induces more miners to invest in mining equipment to compete for a larger share of blocks, or when the price drops it might no longer be profitable to mine and it might take miners offline because they're losing money by operating. I don't see how a drop in miners would affect the price though, it seems to be the reverse of how it works.

[uneng]

There were two main theories I saw.
One was that mining rates dropped due to flooding in China which temporarily took out ~10-30% of the total hashrate.

I don't buy this theory.
The hashrate drop started somewhere Friday, just one day after the retargeting, it was visible on every graph on Saturday and nearly all in the users knew about it the drop, it was pretty obvious, so why would the sell-off start 24h later and be just an instant crash with no prolonged repercussions?
The situation in China hasn't stabilized yet, the fees are through the roof, all the trigger elements in this scenario are still there and affecting the network yet the price is recovering even with no indicator that the entire hashrate isn't done for.

Although I don't like the manipulation theories at all and usually I try to toss them aside a huge sell to wipe out all those long positions by somebody who had a lot to gain from might be a better scenario. I don't think it's that simple, I don't like it but there is nothing else, all the other events are simply too far away from a timing perspective.

We never really know why the market is affected this way or that way, but the theory makes sense... The incident in China could had been just the trigger and what happened after (price dropping), the consequence. Investors see something worrying happened, so they tend to get out the market, causing a considerable drop on that moment, but once they see the situation isn't so serious (or that it's not going to become worse), the market starts recovering slowly again, although the trigger incident issue isn't totally solved yet.

[jostorres]

When it comes to market correction then expect that situations like these are bit common where it can really be tied up.Cant be considered to be healthy one yet it can be still on the manipulative
side of things but situations like these isnt something new into this market where events and news like these can really make out some impact on the entire market.
Inspite for you to see these things to be on negative side then why we cant just see this as an opportunity for us to enter the market on much cheaper compared into those
almost 60k price peak?

Remember just a few months ago we went from 58k to 43k and everyone thought that was the end of bitcoins bull run and we would end up not being at high levels ever again. Looking at the situation right now it looks eerily similar to that. The price of bitcoin is down, the price of many altcoins are down, the market is crying that we are screwed, there are news of people committing suicide because of how much they have lost, and there is an "agreed" talk on social media that this is the doom for crypto.

This happened literally this year, we are on 4th month and this is either second or third time this is happening and people for some reason think that this time they are right, this time it is definitely screwed and bad, I do not know why that would be the case, why they are this much afraid but it happens anytime price goes down and last time we went back to 64k from 43k which is why I am not worried at all.

[ShowOff]

We never find a definite reason when a market correction occurs. But bad news in the mainstream media can have an impact on the psychology of both trader and investor. I heard that the recent Chinese incident was a factor in the price correction (not a definite cause) as well as news that Biden want to implement a bigger tax regime. Almost every bad news get a trader's attention so panic ensues which in the end a correction occurs.

[Issa56]

Seriously have been doing my research and have not seen any concrete reason why bitcoin dump, lots of people long bitcoin and other altcoins bitcoin dump really liquidated lots of people that long there coin on future trading bitcoin dump really crash altcoin price lots of people have been scared and don't really know the cause of the dump and lot's of people have been scared and selling there coin which they believe bitcoin will still dump more which is going to dump altcoin price must people are still expecting more dip but from my research I believe bitcoin price is kind of stable currently which with time it will bounce back gradually and other altcoins are going to follow it so you don't have to be scared but if you are into future trading make sure your laverage is very low.

[Oceat]

We never find a definite reason when a market correction occurs. But bad news in the mainstream media can have an impact on the psychology of both trader and investor. I heard that the recent Chinese incident was a factor in the price correction (not a definite cause) as well as news that Biden want to implement a bigger tax regime. Almost every bad news get a trader's attention so panic ensues which in the end a correction occurs.

For me, it's not bearish yet, there are circumstances that actually affect the crypto market and one of the reason is the hashrate drop. This massive correction may be normal or common to someone but with the that actual drop after Bitcoin reached the $64k ATH. I think someone is dumping their holdings that resulted in this huge decline in the market.

While some news are adding fuel to the fire to make the market worst this is what the journalist doing these days to catch attention, they need to make FUD to the current situation.

[slapper]

It is hard to make a precise answer in this case. There was a news recording that the hash rate of bitcoin, significantly reduce in a short time due to regulation in China in order for safety. The number was reduced 20-50% and I considered this could be a great collision to the market.

The second theory which I observe by myself and through data: big companies (regards to institutional investors) take profit because Q2 is usually considered as the end of a year to many company, especially China. Bitcoin has grown more than 1000% if we compare with the price in last year. So it needs to have a correction in order to increase further

[Refrumatrix]

Be prepared because there will be more crashes in near future, whales and big institutions will take profits too, BTC dominance is way down now and it looks like altcoin season that we have been looking for is upon us finally but what will happen after that? Market will be manipulated and crash will happen