The price of Bitcoin fell about 8% in 10 minutes, leaving cryptocurrency investors scrambling to make sense of the drop.

Elon Musk's SpaceX is reportedly selling its Bitcoin Theories behind the unusual drop in Bitcoin prices include holdings, the bankruptcy of a Chinese real estate giant and concerns about rising interest rates.

At around 9:35 pm UTC on August 18, the price of Bitcoin suddenly plunged more than 8% in 10 minutes, taking the entire cryptocurrency market with it and leaving many in the crypto community scratching their heads. While there appears to be no consensus on the cause of the sudden market drop, several cryptocurrency market analysts have shared their initial theories with Cointelegraph.​

SpaceX sells Bitcoin, sparking interest rate concerns

EToro market analyst Josh Gilbert attributed the decline to an August 17 Wall Street Journal article stating that SpaceX may have sold some or all of its $373 million in Bitcoin holdings.

“Whenever you have a big name in the Bitcoin sales industry, especially someone as influential as Elon Musk, it puts pressure on the price of Bitcoin.”

This would cause the price to drop suddenly about 2.5 hours after the report was published online.

Gilbert said another theory could be a rapid shift in sentiment due to broader market expectations of future rate hikes from the Federal Reserve.

Gilbert explained: "If we also take into account some of the weakness we've seen in global markets over the past few weeks - particularly in risk assets - and anticipate that interest rates may remain higher for a longer period of time, that's A recipe for a pullback.”

He added: “Bitcoin has struggled to rise over the last month, trading between $29,000 and $30,000, with little ‘good news’ pushing the asset higher, which has only exacerbated the sell-off.”

government bond yield

CMC Markets market analyst Tina Teng has a different view. She believes that the recent rise in Treasury yields is the fundamental reason behind the sell-off.

Teng explained that rising bond yields typically indicate less liquidity in the broad market.

"This is probably the main reason why cryptocurrencies are falling," she said.

In addition, Teng said that while the Evergrande crisis may have an indirect impact on Bitcoin prices, she does not believe it is one of the fundamental reasons for the decline in Bitcoin prices. "This has a greater impact on the Chinese economy and investor sentiment," she explained.

Yuan still poses risk to Bitcoin

However, while Teng believes the Evergrande crisis is the main reason for Bitcoin's price volatility, Markus Thielen, head of research at Matrixport, claims the risk of yuan depreciation may have played a significant role in the sell-off.​

“The biggest macro risk is the potential depreciation of the yuan, which is currently at its lowest level since 2007.”

“When China last devalued the yuan in August 2015, Bitcoin prices fell -23% within two weeks of the devaluation. Bitcoin was up 59% from depreciation levels for the year before a more meaningful rally began. %,” Thielen explained.

Whale sells big

While there are many other news events that could be responsible, anonymous derivatives trader TheFlowHorse told Cointelegraph that the sudden price drop could be due to a massive sell-off by a large player, causing further pressure on derivatives.

"It's not just a natural waterfall. Some big shot gave up and started it for a goal. Spot volume is almost incomparable to regular volume."

According to data from cryptocurrency analytics platform Coinglass, more than $427 million in long Bitcoin positions were liquidated in the four hours to publication time. Over the past 24 hours, more than $822 million has been liquidated among traders holding long positions — betting that the price of the crypto asset will rise.

Horse described much of the explanation for the drop as "pure speculation," saying that since the SEC report suggesting its approval of an Ethereum futures ETF came shortly after the sell-off, large funds may have dumped their Bitcoin positions to " Triggers cascade purchase of ETH."

Bitcoin has recovered slightly since the crash, rising 1.2% in two hours, according to TradingView data. At the time of publication, Bitcoin was changing hands for $26,619.

Its price appears to have been buoyed by news that the U.S. Securities and Exchange Commission could approve an Ethereum futures ETF product as soon as October.