The Sudden Drop in Bitcoin Has Caused Short-Term Panic in The Crypto Markets

In the last 24 hours, the cryptocurrency markets have experienced high levels of volatility. Cryptocurrency markets have undergone a period of turbulence in the, as volatility levels soared. The price movements of leading digital assets such as Bitcoin, Ethereum, and others have been erratic, with sharp fluctuations that have caught many investors off guard. The sudden shifts have caused concern among traders, who are wary of market volatility and its potential to cause significant losses.

In the last 24 hours, the cryptocurrency markets have experienced high levels of volatility

Earlier this week, concerns over a banking crisis in the US led to a rapid increase in demand for Bitcoin, and before the US trading session yesterday, BTC retested the $30,000 level. With a positive sentiment in the market, there was a general consensus that the rise would continue, depending on the possibility of the crisis escalating.

However, during the US session, Bitcoin remained flat at around $29,700 before experiencing a sharp drop at around 22:00 (GMT) and falling by approximately 7% within an hour to $27,235, causing short-term panic in the market. The reason for this sudden drop was questioned, with rumors spreading on Twitter about activity in the US government and Mt. Gox wallets, leading to speculation that the US government had sold a large amount of BTC.

Despite this, the recent market movement has caused a brief disruption in the positive sentiment in the market. However, investors saw BTC’s decline to the support zone it had been protected since April 22 as a buying opportunity, and a rapid recovery was recorded towards the end of the US market close. In Asian hours, buying continued, and Bitcoin saw a rebound to the range of $28,800-$29,200.

US Government rumored to have sold part of their Bitcoin holdings

Recent rumors circulating in the cryptocurrency market suggest that the US government has sold a portion of their Bitcoin holdings, which is estimated to be around 41,500 BTC. While there is no concrete evidence to support these claims, the rumors have added to the selling pressure in the market.

Some market analysts speculate that these rumors were intentionally spread to prevent Bitcoin’s resurgence, which has gained momentum due to concerns over banking issues. On the other hand, some analysts believe that the sharp decline was caused by the liquidation of long positions that had accumulated during the recent uptrend.

It should be noted that the rumor about the US government selling their Bitcoin holdings has not been confirmed. However, the selling pressure that has resulted from the rumors cannot be ignored. Blockchain analysis firm Arkham, which has been accused of spreading the rumor, has defended itself by stating that they thoroughly investigated the matter and the information was released after the decline had already taken place. The impact of these rumors on Bitcoin’s future remains to be seen.

High amount of positions closed in crypto futures market

Regardless of the reason, the sudden drop has led to significant position liquidation in the derivative markets. According to Coinglass data, nearly $362 million worth of futures positions were liquidated in the past 24 hours. Interestingly, while 58% of the liquidated positions were long positions, there was also a high percentage of short positions (42%) that were closed out. Closed Bitcoin futures positions were by far the highest at $178.5 million.

Following the sharp drop last night, Bitcoin quickly recovered some of its losses and found buyers around the $28,800 mark in the morning hours.