Yesterday was undoubtedly one of Bitcoin’s worst days ever; in fact, yesterday’s 40% loss was only second to the BTC price collapse in the wake of the collapse of Mt. Gox, then the largest and most important crypto exchange. At the drop’s worst, the cryptocurrency was down 50% in a single 24-hour period, falling from $7,700 to as low as $3,800.

Unsurprisingly, many traders were caught with tier pants down during this move, so to say, with BitMEX reporting that nearly $1 billion worth of Bitcoin positions on their exchange (majority long positions) were liquidated in this massive crash lower.

We’re fast approaching $1 billion in Bitcoin long position liquidations today.

This is unprecedented.

— Cole Petersen (@ColePetersen14) March 13, 2020

This has left many wondering — what pushed BTC so far lower? And, more importantly, what comes next?

What Pushed Bitcoin Lower? Analysts Weigh In

Ross Middleton, a chief financial officer at crypto exchange DeversiFi, is pointing to weakness in traditional markets forcing institutional investors out of their positions on Bitcoin, which is an alternative asset that per traditional standards should be the first to go:

Traders are pulling money out of Bitcoin to fund their margin calls on other asset classes. Perhaps they think that there will be better short-term opportunities to go long other asset classes in the near future.

This was echoed by Raoul Pal — a former executive at Goldman Sachs and CEO of Real Vision. He said the drop may be related to “hedge funds that were long Bitcoin having to liquidate,” citing the fact that managers need to keep their portfolio within a certain risk level.

Indeed, Bitcoin’s volatility has spiked, corroborating Pal’s point. Though, there is a chicken and the egg situation with the volatility; more selling results in higher volatility, higher volatility results in more selling.

There’s also talk about an ongoing liquidity crisis in the back-rooms of Bitcoin market-makers. Purportedly, market-makers on certain exchanges have dumped all their positions, meaning there is no buy-side demand to support BTC.

Another Theory…

There is also one other theory.

Rumor has it that the PlusToken scammers moving coins may have triggered (or at least contributed to) the sell-off. Indeed, in the day prior to the dump, the operators of the multi-billion-dollar PlusToken scam were found to have moved over $100 million worth of BTC into mixing services for privacy reasons, then presumably dumped onto exchanges for fiat or fiat equivalents.

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