So, what's going on?
Well, there are a number of factors that contributed to the falls.
1️⃣ There was a massive drop in Bitcoin hashrate. This was attributed to blackouts that have been instituted in China. As we know, Chinese miners control the overwhelming amount of Bitcoin hashrate (a concern I have raised in the past). Of course, a collapse in hashpower not only creates FUD about network security but it also means that transactions slow to a crawl
2️⃣ Rumours (or FUD) that the US Treasury would be charging financial institutions for using cryptocurrencies for money laundering. So far, these are unconfirmed and I can't see any official sources. Either way, it spooked some weak hands who then may have dumped.
3️⃣ Massively overleveraged longs. Highly leveraged positions can lead to a cascading impact of further liquidations. That is because when an exchange liquidates a losing position, they have to sell the underlying cryptocurrencies and convert into USDT. This selling pressure itself leads to further falls in the price and hence liquidations.
So, from my read of the situation, it appears to be because of FUD that leads to a small correction which is exacerbated by the leverage in the market.
I think this should further illustrate the risks that come from trading with leverage. It is often shilled as a method to easily multiply your crypto gains whereas the reality is often quite different.
Anywhoo, that's a bit of a market update. I am not too phased by it if I’m honest. I will have a new video for you folks in a few hours – and its a hot one 😉
Hashrate Fall 👉 https://twitter.com/cryptoquant_com/status/1383687732082348032 Miners Collapsing 👉 https://bitcoinmagazine.com/business/bitcoin-mining-hash-rate-drops-as-blackouts-instituted-in-china Chinese Miner Control 👉 https://www.youtube.com/watch?v=qctnB6DHMLA Rumous of Treasury 👉 https://twitter.com/Fxhedgers/status/1383611847144730626 Leverage Being Rekt 👉 https://twitter.com/coinbureau/status/1383757303099232263