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Why Bitcoin Surpassed $64,000 and Plunged to $59,000 in Minutes Today
Cryptocurrencies are known for their volatilitybut today it was pushed to the max since Bitcoin (CRYPTO: BTC) briefly jumped 12.6% to above $64,000, only to collapse to $59,000 an hour later. As of 3:30 pm ET, the cryptocurrency is trading at around $60,000 and is still up 5% over the past 24 hours.
The entire market followed Bitcoin’s move, but Ethereum (CRYPTO: ETH) e Dogemoneta (CRYPTO: DOGE) were two of the most important promoters. Ethereum jumped 7.4% at its peak before returning unchanged on the day. Dogecoin regained much of its success by late afternoon and was up 13% on the day.
Image source: Getty Images.
Bitcoin liquidation madness
When assets move quickly, this often causes leveraged positions to shrink. When a stock or cryptocurrency rises, it is called a short squeeze, where short sellers are forced to buy to cover losses, further fueling the rally. According to Coinglass, in the past 24 hours, $175.5 million in leveraged short positions were liquidated for Bitcoin and $363 million for cryptocurrencies, which could have fueled the rally.
But on the way down the opposite is true. Leveraged long positions have to be sold, which accelerates the decline. In the last 24 hours, $85.9 million in long Bitcoin positions and $336.4 million in long cryptocurrency positions were liquidated.
Coinbase sends the industry into a tailspin
It didn’t help Global Coinbase had a glitch on its app that was causing customers to see a zero balance. This has prevented some people from trading during this period of high volatility.
CEO Brian Armstrong said there was a more than 10-fold increase in traffic to the company’s apps during this period. This shows how likely it is that the trades took place in a very short period of time.
Ethereum and Dogecoin follow Bitcoin’s lead
The move to Ethereum comes about two weeks before the update called Dencun, which is expected to make the blockchain cheaper and faster. This could increase Ethereum’s use as a token for real-world utility.
It also helped that Bitcoin’s surge following the launch of Bitcoin ETFs has led to speculation that Ethereum ETFs could be next. This is the second largest cryptocurrency and would make sense as the next crypto ETF given its reach and name recognition.
Dogecoin also has name recognition, and as a sentiment-driven memecoin most days, it’s no surprise to see the token growing today. But that doesn’t mean the move will last because there is no fundamental change in the token compared to just a day ago.
Where do Bitcoin and cryptocurrencies go from here?
The only thing that is certain is that cryptocurrencies will be volatile in the future. What is less clear is the direction prices will take.
The story continues
The cryptocurrency sector is largely driven by sentiment, and sentiment has been strong in recent months for both crypto and growth stocks, which are usually correlated with cryptocurrency values.
If the momentum continues, values could easily rise. But keep in mind that momentum could change quickly if the market goes south.
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Travis Hoium has positions in Coinbase Global and Ethereum. The Motley Fool has positions and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
Why Bitcoin Surpassed $64,000 and Plunged to $59,000 in Minutes Today was originally published by The Motley Fool