The bitcoin (BTC) crash caused a lot of panic in the cryptocurrency market this week. It was the strongest price movement since the crash in May. The crash appears to have been mainly caused by a chain reaction of liquidations by overleveraged traders in the derivatives market.
That chain reaction may have been caused initially by “buy the rumour, sell the news” traders. These types of investors expect that the lead-up to an event will generate hype and price increases, but that during the actual event traders will dump and then the price will fall again. The event this time was of course the introduction of the bitcoin law in El Salvador.
Investors in particular
Newer investors in particular sold their crypto out of panic when the decline set in, and we saw a similar trend happen for a few months. https://moveco.io/ has enough information. On the other hand, it was just another opportunity for so-called bitcoin whales, investors with huge amounts of BTC, to accumulate more bitcoin again.
Also, the third largest bitcoin whale on the market, an unknown investor with more than 110,000 BTC in his wallet, worth a staggering $5 billion, “bought the dip.” The investor bought 460 BTC on cryptocurrency exchange Coinbase, Whale Alert reported on Sept. 8:
Bought the dip
Nayib Bukele, the president of El Salvador, also bought the dip. In total, on September 7, he invested no less than 550 BTC, currently worth about $25.5 million. Whales have been accumulating BTC all summer. Folm.io has enough information. Whale Alert is also currently reporting massive amounts of Ethereum (ETH) pouring out of exchanges, usually a very bullish sign for the price.
We see especially altcoins recover strongly after the crash. Many altcoins were up more than 20% this morning, however, several prices are correcting back down at the time of writing.