The global markets were subjected to an unparalleled meltdown yesterday that proved to be particularly impactful to the crypto markets, with Bitcoin and many major altcoins posting their largest single-day losses ever.
This extraordinary price action caught investors by surprise and created a cascade of liquidations on BitMEX that further perpetuated the selloff, with buyers being unable to absorb the massive amount of selling pressure that began snowballing as the bears gained momentum.
Although BTC is currently in the process of rebounding, it is important to keep in mind that BitMEX’s order book has been eviscerated, leading one economist to warn that more major price swings could be imminent.
Top analyst: Bitcoin has seen its “final capitulation”
Bitcoin’s capitulatory selloff sent the crypto reeling from 48-hour highs of $8,000 to lows within the mid-$3,000 region, which is where bulls finally garnered enough buying pressure to propel the crypto higher.
Interestingly, the bounce at this level came about at the exact moment that BitMEX went down due to “hardware issues,” leading many analysts to pin the drastic nature of the decline on the torrent of liquidations seen on the platform.
DonAlt, a prominent cryptocurrency analyst who forecasted the benchmark cryptocurrency’s decline from $10,000, noted that he believes this recent move marked a “final capitulation.”
“People out here talking about ‘final capitulation’ while we almost went to zero due to cascading liquidations overnight. If there ever was a final capitulation yesterday was it.”
This seems to insinuate that the crypto’s recent lows are a long-term bottom that will be followed by either a bout of accumulation or further upside in the weeks and months ahead.
Thin BitMEX’s order book suggests massive volatility is inbound for the crypto market
Alex Krüger – an economist who focuses primarily on cryptocurrency – explained that BitMEX’s order book is now occupied entirely with sub-$100k orders, which marks a massive change from the multi-million-dollar orders that previously filled its books.
“This is Bitmex’s orderbook. There are usually beefy orders (in the millions) in the top of the book. Look at it now: 57K and 90K. See how price is jumping around. Those are very large swings in a few minutes.”
It appears that yesterday’s meltdown wiped out a significant number of traders on the platform and scared off both market makers and liquidity providers, leaving the entire cryptocurrency market at risk of seeing massive volatility in the days ahead.
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