The past weekend reminded everyone of the potential high volatility in the cryptocurrency market. The price of bitcoin from a record high near $65,000 fell below $50,000 in a few moments. ETH took a dive from $2,500 to $1,930.
Bitcoin and other cryptocurrencies suddenly plunged over the weekend on a scale we haven't seen since late February. That's when, according to CryptoQuant, a net total of 37,000 bitcoin with a market value (as quoted there) of more than $2 billion was expected to flow into cryptocurrency exchanges on Sunday, February 21. Currently, there is talk of an inflow of 9 thousand bitcoin before the weekend and a massive power outage and blackout in one of China's provinces.
Reports indicating power outages were released late last week, with the blackouts intended to facilitate safety inspections in response to a recent flooding incident at a local coal mine where 21 miners were temporarily trapped underground when power and communications went down.
According to the Cambridge Bitcoin Energy Consumption Index, Xinjiang province, where the blackout was reported, represents nearly a quarter of the global hash rate. Hash rate is an indicator showing the processing power of a bitcoin network responsible for the speed of data processing and network security. The weekend saw the largest daily drop in the total hash rate of the bitcoin network since November 2017, which may have translated into the price of the cryptocurrency, plus leveraged long positions were liquidated very quickly. According to the Bybt website, a new record was set on Sunday for position liquidation. More than a million positions were cleared from order books on exchanges, and the total amount of liquidated positions was $10 billion. The single largest position lost $68.73 million.
The hash rate seems to have already returned to previous levels, and the flash crash that took place may have encouraged buying at better prices and a clearing of the market situation after Coinbase's debut. At this point, the BTCUSD exchange rate has returned to $57,000 and ETHUSD to $2250.
Thus, the cryptocurrency market has shown its risky face, where you always need to keep your hand on the pulse, even on weekends.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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