Bitcoin crashed spectacularly on Sunday, with the price of $BTC plummeting as far down as $49,300. The US economy is signalling a recession, and war is brewing – will Bitcoin be able to recover in such an environment?
Sunday carnage
The last eight days for Bitcoin have seen some torrid price action. Since spiking through the top of its bull flag on 29 July, the $BTC price has seen a nigh on 30% correction from top to bottom, corresponding to a loss of nearly $21,000.
The worst part of the carnage took place on Sunday evening, and a series of liquidations led to traders on both the long and short side being wiped out to the tune of more than $1 billion.
In the last few hours a wick down in price led $BTC down to plumb the depths at $49,300. Since then, a recovery has perhaps begun, with the price currently at a little under $53,000.
Why the sudden plunge in price?
The worsening US economy has to be a major reason for the collapse in the crypto market. A massive slowdown in hiring, and unemployment figures coming in worse than expected, have obviously contributed. That said, the Sahm rule recently triggered, which is widely recognised to signal that the US has now entered recession.
Arthur Hayes, ex-CEO of BitMEX, posted on X that his traditional finance contacts had told him that “somebody big got smoked and is dumping all crypto”. This is likely referring to trading firm Jump Crypto, which has been moving very large crypto positions over the weekend, including $46 million worth of $ETH.
However, probably the biggest factor is the collapse in the Japanese stock market. The NIKKEI plunged as much as 21% over the weekend. This particular disaster has caused the Federal Reserve to call an emergency meeting on Monday. With the US stock markets opening in just a few hours, a crash here might also be expected. With this in mind, the Fed could be prompted to make an emergency rate cut today.
What’s next for the $BTC price?
Source: TradingView
Looking at the daily chart for $BTC, it can be seen that the crash took the price down to the horizontal band of support between $52,000 down to $51,000. $52,000 has confluence with the bottom of the bull flag, so this could hold, at least for now.
$48,000, and then $45,000 are horizontal supports below. With the US stock market opening soon, it’s anybody’s guess what will happen next. Seat belts should be securely fastened.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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