The Bitcoin market sent investors into a state of panic after crashing to levels last seen three weeks ago, in under 15 minutes. Crypto-Twitter went haywire with marathon tweets of community members trying to figure out the exact cause of the bloodbath.
Post-Bitcoin’s rally to a new high of $63k last week, the cryptocurrency dropped to $52,148 overnight. Bitcoin bulls had already been struggling to revisit the new highs prior to this, but the benchmark asset faced pushback at $60,174. At that price mark, Bitcoin had already declined by 1.9%, bringing weekly losses to 3.6% at the time.
The short-term outlook was still bullish according to analysts, but Treasury rumors may slow things down a little bit as the market has quickly reacted with liquidation.
Treasury Rumors force bulls to liquidate long positions
Although this is yet to be verified, many are pointing to the rumors of the U.S Treasury planning to charge financial institutions for money laundering using cryptocurrencies as a major propeller of the swift bitcoin price decline.
Mixed reactions from traders and investors trailed the scenes. Some classify the news as the usual theatrics rehearsed by bulls to sway weak hands into selling. Following the rumors, $9.09 billion worth of long Bitcoin positions has been liquidated within the last 24hours.
“Market spooked overnight on the Treasury rumors. High leverage and low weekend liquidity causing a nearly 20% sell-off before recovering.” Skew noted.
Crypto trader and YouTuber “CryptoDaily” reacted to the news the same way other analysts have responded: “Over leveraged longs getting rekd is always a good sign for a market reset.”
Morgan Creek’s Anthony Pompliano simply joined “HODL Twitter” as he reveals he went ahead to buy the dip. For whales, buying the dip is always good for business and analysts are collectively reiterating that strong hands will go to any length to persuade weak hands into selling.
Bitcoin begins swift recovery, major upside correction still possible
Bitcoin has quickly bounced back, correcting gains slowly. At the time of this writing, Bitcoin had surged to $55,525.
Retesting $60,000 seems possible if Bitcoin can maintain these price levels as bulls work towards correcting losses. Glassnode’s data also softens the market blow, as it revealed that every Bitcoin bull cycle saw at least three supply peaks held by short-term holders (weak hands), and the market is only just wrapping up from the first, with two more to go.