‼️‼️ Explaining Bitcoin’s ‘Flash Crash’
Bitcoin (BTC) dropped 7.5% Monday morning, its steepest intraday drop since mid-August. Bitcoin is still up over 150% this year, though the massive, sudden and unexpected “red candle” on the charts is a reminder of the largest cryptocurrency’s volatility.
Last week it seemed like very little could stand in bitcoin’s way, with many of the industry’s long-standing issues seemingly resolved. So why did bitcoin drop today?
It might be better to start at why it was climbing in the first place.
For instance, Binance, the largest and most controversial crypto exchange, agreed to pay a $4.3 billion fine to U.S authorities to keep operating, a “historic” penalty it seems likely to survive. This settlement also cast the U.S. Securities and Exchange Commission’s (SEC) legal imbroglio with U.S.-based exchanges Coinbase and Kraken in a better light.
The regulatory front in the U.S., generally speaking, also seems to be easing. If there isn’t yet “regulatory clarity,” (that old industry adage)proposals have been made by high-ranking legislators giving a good indication of what’s likely to come.
There are also predictable events like Bitcoin’s scheduled “halving” next year, when the network literally cuts the amount of BTC that enters into circulation in half, and the potential the SEC approves a bitcoin ETF application. Market watchers have been talking up both events, and the ETF could be said to be the prime driver of bitcoin’s price recently
Then there are the macroeconomic forecasts. Bitcoin, which is sometimes called “digital gold” because it theoretically could act like a similar store-of-value, has rallied alongside its physical metallic counterpart. Gold futures recently settled at a record end-of-day high, in part driven by inflation concerns.
Interest ratesmanaged by the Federal Reserve, are at their highest level yet in the 21st century, as the U.S. central bank works to quell inflation and cool an overheated economy.
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