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“Classic top setting”?After hitting a record high, Kraken’s Bitcoin price plummeted



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

6,600, which is close to the local bottom last week.

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.

Kraken XBT/USD 1 minute chart shows a crash. Source: TradingView

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…”