- Bitcoin’s price saw major volatility over the weekend, dropping thousands of dollars before recovering somewhat
- The flash crash triggered liquidations in leveraged positions, exacerbating the price decline
- While Bitcoin has rebounded from its lows, the weekend swings highlight the cryptocurrency’s ongoing volatility
The price of Bitcoin saw major fluctuations over the weekend, dropping thousands of dollars in minutes before rebounding from its lows. The volatility highlights the notorious volatility of the cryptocurrency markets.
The Sudden Drop
On Sunday night, Bitcoin suddenly fell from around $44,000 down to about $40,300, a plunge of over $3,000. The flash crash came after Bitcoin had climbed to about $44,000 last week and traded sideways below that level throughout the weekend.
Other Cryptocurrencies Follow Suit
Bitcoin’s drop rippled through the rest of the crypto markets. Ethereum fell around 6% on Monday to $2,196 while XRP lost 6% to fall to [current price]. Solana‘s SOL token slid 7% to [current price].
Crypto Stocks Take a Hit
Publicly traded crypto companies also took a beating as Bitcoin tumbled. Coinbase and MicroStrategy both dropped around 6%. Bitcoin mining stocks like Riot Platforms and Marathon Digital plunged even further, with losses of 12% and 14% respectively.
Leveraged Positions Liquidated
The sudden drop triggered a wave of liquidations in leveraged positions. According to data from CoinGlass, Bitcoin saw $120 million in long liquidations over 22 hours while Ether saw $86 million in liquidations. The cascade of liquidations likely exacerbated Bitcoin’s price decline.
Looking Ahead
While Bitcoin has fallen from its weekend highs, chart analysts say the cryptocurrency would likely need to fall further to put its ongoing rally in jeopardy. Some investors are now looking ahead to potential catalysts in 2023 like a Bitcoin ETF approval and the next Bitcoin halving in 2024. But in the near-term, Bitcoin’s wild price swings highlight that volatility still reigns supreme in the cryptocurrency markets.
Conclusion
Bitcoin’s weekend flash crash provided another example of the cryptocurrency’s propensity for wild price swings. While Bitcoin has rebounded from its lows, the drop showcases the two-sided risk of investing in such a volatile asset class. With major catalysts potentially on the horizon, market observers will be closely watching to see if Bitcoin can maintain its recent bullish momentum going into 2023.
