The past few hours have seen a marked drop in the price of Bitcoin. As such, some of the gains experienced during the past few days have been offset. What’s more, this slight market turbulence has led some to question whether crypto will ever recover.
Bitcoin suddenly dropped after days of gains
May 17th saw the Bitcoin price plummet drastically within a matter of minutes. Although it was initially unclear what had caused this massive drop, the reason soon became clear. It is now widely accepted that a large sell-off led the price to drop from around $7,800 to $6,400, according to CCN.
Nevertheless, one should note that the price of Bitcoin has since bounced back slightly. The price of Bitcoin, at the time of writing, is $7,345 – meaning that it is trading significantly below the $8,000 level seen during the last days.
As such, the sudden drop in the price of Bitcoin, which has brought the wider cryptocurrency market down with it, has led observers to ask the age-old question; will crypto ever recover?
The short answer to this looks likely to be yes. According to Su Zhu, the CEO at Three Arrows Capital, gave some insight into the most recent market shift. Specifically, Zhu noted that a substantial Bitcoin sell order was placed on Bitstamp.
Is a $35 million sell-off behind the drop?
This appears to have acted as a trigger to an even larger sell-off. According to the Gnosis employee Eric Conner, this initial sell order might have been 5000 BTC large. This would mean that its was worth more than $35 million at the time.
Nonetheless, the substantial sell order appears to have spread concern in the market. What’s more, a faulty Bitstamp API appears to have worsened the situation. When the mark price subsequently appeared lower, contracts on BitMEX were automatically liquidated, according to Zhu:
”Bitstamp API issues I heard. Some bug where people getting filled on prices above their buys. This is used on leveraged products as mark price, hence triggering liquidations on BitMEX.”
Consequently, asking ”will crypto ever recover” seems overly cautious. The price of Bitcoin has already bounced back from the initial sell-off. Moreover, one should view this slight market drop in the context of the last week’s frantic cryptocurrency rally.
As such, the cryptocurrency market may well need time to consolidate its recent gains. Following this, however, there are no fundamental problems standing in the way of further price increases. Rather, several factors suggest that the next crypto bull run could be even greater than in 2017.
”Will crypto ever recover?”
Although ”will crypto ever recover” is a legitimate question, there does not seem to be any need to ask it at this point. Rather, this recent market drop appears to have been caused by a singular sell-off, which triggered market mechanisms.
With that said, the total cryptocurrency market capitalization has already surged past the $230 billion line. Moreover, the market could be in need to consolidate the past few weeks’ increases.
All in all, asking whether crypto will ever recover seems unfounded – as this looks to be nothing more than a market blip, rather than a return to a bear market.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.