What Caused the Sudden Crash and Fast Recovery?

[asriloni]

Did anyone else notice the sharp move this morning? Seeing Bitcoin drop to around $60,000 was surprising, especially after the slow decline we’ve had since last year’s peak.
It looked like a classic liquidation cascade, where too many leveraged positions were forced to close at the same time. What stands out even more is the strong rebound back toward $71,000 later in the day. This suggests there was significant “buy the dip” demand waiting at lower levels.
We’ve seen similar V-shaped recoveries in previous cycles, often near local bottoms when selling pressure becomes exhausted. However, these moves can also turn out to be temporary relief rallies if broader market conditions remain weak.

Do you think this move represents a capitulation event, or just another relief rally before continuation lower?

It's just another relief rally before btc goes even lower. It's called a dead cat bounce. It's a small recovery happened due to the optimism to buy the dip. Yet it's gonna drop even further. The recovery ishappening just to fool the investors to think if Bitcoin is raising up again.
Beside that it's also to liquidated so many liquidity in the short position. It's usually happening during the big crash like this.

Since the bearish pennant and head-shoulder already confirmed. We are yet to go up. It seems we're gonna face another dump again very soon. There many liquidity in long position. So it tells us where candle is going soon.

[Swordsoffreedom]

As usual moment when bitcoin getting sudden crash always has fast recovery, before bitcoin dropping to $60k has great moment bitcoin raise higher price above $120k and suddenly dump to $102k but success recovery in short moment up to $115k. The same moment right now when bitcoin dropping until $60k without few days bitcoin have been success break out more than 20% by raising to $71k and looks how faster bitcoin recovery after sudden crash.

This dependson the market situation. In a bull market, when Bitcoin experiences a sudden drop, it will recover very quickly afterward and may even create new ATH as you mentioned. However, in a bear market, price rallies following sharp declines are often only temporary recoveries before prices continue to fall even further. In other words, it was just a dead cat bounce.

Note that the bull market has ended and we are now in a bear market. Bitcoin's volatility at this stage will be completely different from what happen in a bull market. Therefore, any recovery should be viewed with caution, as it is often only temporary, and not a sign of a reversal of the trend.

[LogitechMouse]

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However, these moves can also turn out to be temporary relief rallies if broader market conditions remain weak.

Do you think this move represents a capitulation event, or just another relief rally before continuation lower?

As somebody that's been into crypto for quite some time, seeing Bitcoin dropping to as low as $60,000 wasn't surprising anymore. I mean I've seen way deeper corrections in the past.

Now as for the rebound, also it isn't surprising anymore. The best example for this one is the 2020 drop where Bitcoin dropped from around $8,000 to around $4,000 in just a few days just because of the WHO announcing the pandemic. After reaching the bottom, Bitcoin made a V-recovery just like what happened this time.

These V-recovery moves might be a "relief bounce" towards another downwards movement in the future. It happened when Bitcoin reached as high as $98,000 a few weeks ago only for it to go down to as low as $60,000. It might happen again this time. A relief bounce then a downwards movement. If you will ask me, we are already in the bear market so these bounces will create lower highs and lower lows.

[Silikiem]

The sudden crash doesn't really need explanation and the fast recovery is because the market decided that the price is highly undervalued.
Just remember that when there is a crash and the crash just got too deep it seemingly abnormal, there is a high chance people buying back in masses and the price will swiftly recover.
That just how the market works.

The bitcoin market largely moves in a way that no one can predict what will happen in the next minutes, of course whenever bitcoin crashes deeply like this people or investors will always try to buy more at such a reduced price and when this happens bitcoin tends to recover. But then again, bitcoin have several factors responsible for its volatility and most of this factors are very much unknown to us so no one can really say the exact cause of this volatility but one thing is for sure that it will always recover despite going down at some point in time.

[Ndabagi01]

Do you think this move represents a capitulation event, or just another relief rally before continuation lower?

I feel that the market will still go lower which signifies another rally before the market continuation go lower. The market has performed so well in the just concluded bull run, we should be happy that the market performed exceptionally well and it was just the high expectations and demand of the people that were not meant that actually made many to still be hoping that the market will bounce back after falling off the $100K demand zone and can’t recapture it again. Let’s get more realistic, the market is not working with our emotions neither will it use that to show how the trend of the market will go, so let’s get over it and welcome the bear market which is full of a lot of opportunities to tap into in order to be better positioned for the next big bull run.

[Dave1]

Do you think this move represents a capitulation event, or just another relief rally before continuation lower?

I feel that the market will still go lower which signifies another rally before the market continuation go lower. The market has performed so well in the just concluded bull run, we should be happy that the market performed exceptionally well and it was just the high expectations and demand of the people that were not meant that actually made many to still be hoping that the market will bounce back after falling off the $100K demand zone and can’t recapture it again. Let’s get more realistic, the market is not working with our emotions neither will it use that to show how the trend of the market will go, so let’s get over it and welcome the bear market which is full of a lot of opportunities to tap into in order to be better positioned for the next big bull run.

In can recover, but not to the point that we are expecting because we're in the bearish trend already. And the sudden crash to recovery, it's just a normal as there are entity that could easily manipulate the price to their advantage, invest during the crash and then sold off when it has recovered. It's an open secret, that's why we advise newbies to be very careful on how they invest on bear market as it's very hard to see the price fluctuating and then going down hard.

And as you have said, we have to face the incoming bear market. It's inevitable, this is the cycle of our market, and as we gain experience thru multiple cycles, we can react with the right mindset. We should be really taking advantage of it as the market is down, we should accumulate or start our DCA and then hold for a long time or at least in the cycle to maximize our profits.