Bitcoin Price Crash: What Do The Pro-Traders Say?

The Bitcoin price has fallen steeply between on the 7th and the 22nd of August 2023, dropping from just under $30,000 to below $26,000. This is the lowest level since its June low, when BTC was trading at around $25,000.

Viewed through a wider lens, however, Bitcoin is still up 58% year-to-date, and 63% from its 12-month low of $15,900 from November 2022.

Pro-traders Comfortable With Bitcoin Price Performance

Certainly the pro-traders don’t seem phased by the recent slide. As a round of their tweets from the last couple of days shows.

@davethewave, for example, says it’s ‘situation normal’ for Bitcoin from the perspective of the Logarithmic Growth Curve.

Source:https://twitter.com/davthewave

@CarpeNoctom (Josh Olszewicz) sees the price holding according to the two Year Moving Average. Josh also sees other data he likes "weekly active addresses continue to hold near multi-year range highs weekly transaction counts rising again, nearing the May ATH."

Source: https://twitter.com/CarpeNoctom

@rektcapital sees current price performance as on par with August pullbacks in previous years – and while a further slide in September (usually not a good month for Bitcoin) is possible, Rekt is expecting it will likely only be "single digits".

Source: https://twitter.com/rektcapital

Ben Armstrong (Bitboy_crypto) is nothing but laser eyes (does he know what bullish means?)

Source: https://twitter.com/Bitboy_Crypto

And famed investor Peter Brandt isn’t running for the hills either.

Source: https://twitter.com/PeterLBrandt

What Triggered the Bitcoin Crash?

In terms of reasons for the Bitcoin price hit in the last couple of weeks, there are several contenders.

Rising Interest Rates
Rising U.S. interest rates have made traditional assets more attractive and reduced the demand for riskier assets like Bitcoin. US Treasury yields are on an upswing which is pushing investors away from towards saving. The Federal Reserve has signaled that it will start tapering its bond-buying program soon, which could lead to higher borrowing costs and lower liquidity in the market. This could also strengthen the U.S. dollar, which has an inverse relationship with Bitcoin and other cryptocurrencies.

Big Liquidations
According to a range of sources there were big investor liquidations on August 18th, when bitcoin briefly dipped towards $25,000 and triggered a cascade of forced selling by leveraged traders. Some estimates have it that $3 billion worth of crypto positions were liquidated in 24 hours, the largest single-day liquidation event in 2023. This event was caused by a combination of low liquidity, high leverage, and negative news flow, which created a feedback loop of panic selling and margin calls.

Delayed ETF Decision
One of the main factors that could have triggered the sell-off is the uncertainty surrounding the approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). The SEC has repeatedly delayed its decision on several spot bitcoin ETF applications, citing concerns about market manipulation, fraud and investor protection. The latest delay came on August 20, when the SEC postponed its ruling on an application by Cathie Wood’s Ark Invest until November 14. This disappointed many investors who were hoping for a positive outcome in August.

Market Malaise
Another factor that has contributed to the price fall is the lack of momentum and enthusiasm in the crypto market. Bitcoin has been largely trading sideways since March, unable to sustain above 30,000, while not falling below $25,000. The market sentiment has been mixed, with some bullish signs such as increased institutional adoption and innovation being stifled by regulatory crackdowns and environmental concerns.

Catalysts for a Potential Crypto Market Resurgence

As the pro-trader sentiment above shows, those ‘in the know’ don’t seem unduly alarmed. Many analysts believe the current price fall is temporary and that the crypto market will recover soon. They point out that the fundamentals of Bitcoin and many other cryptocurrencies remain strong, such as growing adoption, innovation, network effects, scarcity, and decentralization. They also argue that the crypto market is still in a long-term uptrend and that the current correction is a healthy and necessary one to shake out "weak hands" and create new entry points for long-term investors.

Some of the potential catalysts that could boost the crypto market are:

• The approval of a spot bitcoin ETF by the SEC.

• The eventual recovery of the global economy from the pandemic, which could increase the demand for riskier assets and innovation.

• The adoption of bitcoin as a legal tender by more countries, following the example of El Salvador, which could increase its accessibility and utility.

• The development of new technologies like Ordinals and other innovative solutions that could improve the scalability, security and usability of Bitcoin.

Conclusion

The Bitcoin price and crypto market overall and have fallen steeply between the 7th and the 22nd of August 2023 due to a combination of factors. However, many experts see these as short term and cyclical. In the long term, most remain bullish on Bitcoin, given its unique value proposition as a scarce, decentralized and censorship-resistant asset that can serve as a hedge against inflation and currency devaluation.