Bitcoin (BTC) hit a record high on various exchanges on November 30, but especially a record that made headlines for different reasons.
Data from the cryptocurrency exchange Kraken shows that the price of BTC/USD hit the highest price in its order book, and then fell to $16,600 within a few seconds.
Kraken BTC price drops by $3,000
The cause of this air crash is likely to be the so-called “stop-loss operation”, which will cause a large number of positions to be closed and cause great pain to many speculators.
Stop loss operations involve high-volume traders who intend to place a large number of sell orders at a specific price point and then determine where they believe there is a large number of stop-loss positions. In this case, the target price is around $1
The result is a series of sales pressures. If successfully estimated, the results will be provided soon. Only after the process is over can the market rebound.
Liquidity risk is always a given factor in exchange trading, and Kraken’s one-minute drop of $3,000 is an appropriate indication of why traders should be cautious near high prices.
Another explanation, and one that may have contributed to the event, is that investors chose to exit at a price close to $20,000 to avoid the cost of a sudden reversal at the resistance level.
Bollinger warns of “classic top formation”
John Bollinger, creator of the Bollinger Bands volatility indicator, warned: “Ok, time to watch, $BTCUSD. This is the classic top setting.”
“There is no confirmation that the device can easily be overrun, but wise traders should wash their glasses.”
When a Twitter user asked whether this is the local highest price or whether the price of Bitcoin will fall from here, he replied: “Currently, the potential local highest price…”
At the same time, in addition to Kraken, Bitstamp also set its own all-time high of US$19,869, and BTC/USD subsequently fell to US$19,000. The pair recovered this level a few hours ago.
Binance concluded: “For those who are optimistic about #Bitcoin, today is the day you have been waiting for.”