Crypto Market Sees Record Flash Crashes, What’s Going On?
Volatility in the cryptocurrency market has continued, with established coins such as Bitcoin and Ethereum facing extreme price volatility. Since January Flash crashes increase dramaticallyremove billions of dollars from the market. One crypto analyst suggested that these flash crashes are driven by several factors, providing detailed insights into the actual situation in the market.
Why flash crashes occur in cryptocurrency market
A crypto analyst known as “Kobeissi Letter” shed In the recent market crash and why the top coins have dropped sharply. The analyst revealed that the number of flash crashes increased, resulting in more than $300 billion being removed from the market within 24 hours.
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He revealed that the day before, the market started selling Bitcoin is below $95,000 mark. CT to 15:15 ET between 2:15 AM EST, cryptocurrency is one of the most shocking crashes, down $5,000 in just a few minutes.
Ethereum is the second largest cryptocurrency after Bitcoin, making the situation worse. Altcoin experienced massive liquidation, resulting in 37% Price crash February 2, caused by the headlines of the trade war.
Kobeissi’s letter has revealed that the key factors in these dramatic flash collapses are institutions and Retail investors. Wall Street Hedging funds Their short-term position on Ethereum has increased by 500% since November 2024, marking a historic bearish bearish on Ethereum. Ethereum’s short position has also increased It’s over 40% in just one week. Additionally, since December 2024, Ethereum’s price has fallen by about 40%, while Bitcoin has fallen by 15%.
on the other hand, Institutions continue to accumulate Bitcoinwhile retail investors invest capital in smaller High-end coins like Solana, Extreme volatility occurs in these assets. As analysts say, this “polarization” leads to the formation of a “air pocket” of liquidity. As a result, when the sell-off starts, it triggers cascading liquidation, amplifying Market instability and price collapse.
Analysts also point out that this polarization works in the opposite direction as the market can recover quickly, resulting in billions of dollars increasing their market cap in hours.
The shift in emotional and political influence leads to market collapse
Kobeissi’s letter revealed that the fear and greed index fell from bullish stance to 29% from a few weeks ago Extreme fearemphasize the speed at which market sentiment becomes negative. Analysts believe that the extreme position of the cryptocurrency market is causing an increase in these flash crashes, making cryptocurrencies obviously unpredictable.
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Apart from the turmoil, analysts revealed that politics and corporate influence are dictating the cryptocurrency market. He stressed Eric Trump Publicly support the purchase of Bitcoin and Ethereum In the decline, it is consistent with Ethereum’s February recovery on February 3 and the Bitcoin rebound on February 25.
and Market experience flash memory crash and instability, microscopy continues to accumulate Bitcoin. Analysts revealed that the company also contributes to the polarization of Bitcoin Endless accumulation trend. Although the company bought more bitcoins, MSTR stock continued to decline, which was the November 20 high that fell by 45%.
Featured images from Unsplash, charts from TradingView.com
