Forget Walmart, Here’s The Real Reason Why Bitcoin Crashed

Reynaldo Marquez

1 year ago

2 mins read

Picture of four bitcoin on a floor covered with U.S. dollar currencies

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Just another Monday for Bitcoin as the market rallied and immediately crashed over a fake Litecoin partnership with Walmart. BTC’s price turned green quickly after as it came out of a sideways weekend.

At the time of writing, Bitcoin and other major cryptocurrencies record small losses. BTC’s price trades at $44,669 with a 2.5% and 13.4% loss in daily and weekly charts, respectively.

Bitcoin BTC BTCUSD — loosesh minor losses after a flash crash in the daily chart. Source: BTCUSD Tradingview

Analyst Ali Martinez showed that current levels could prove to be “weak” support. The In/Out of the Money Around Price (IOMAP) indicator, used to measured potential support/resistance levels, indicate that around 150,000 addresses bought Bitcoin in the $42,900 to $44,220 region.

Thus, if BTC’s takes another dive below those levels, it could probably return to the high in the $30,000 region with $40,250 to $37,600 acting as the next support.

#Bitcoin sits on weak support! 🥴

The IOMAP shows that 150K addresses had previously purchased over 440K $BTC between $42,900 and $44,220.

A downswing below this demand wall might encourage traders to sell, increasing the odds for a bearish impulse toward $37,600-$40,250. pic.twitter.com/RJTA3yy4nK

— Ali (@ali_charts) September 13, 2021

Analyst Checkmate for Glassnode Insights claimed that the recent crash, that saw Bitcoin dropped from $52,000 to $43,000, was triggered by yet more over-leverage positions in the derivatives market. Most of the traders in this sector were taking long positions.

Thus, the crypto market was once again vulnerable to a liquidation cascade as it happened on every major movement to the downside since May 2021. In this context, and has it was highlighted by Martinez, the short squeeze to $47,000 took place with a weak market structure.

Before the Walmart and Litecoin fake report, CryptoQuant recorded a high amount of Bitcoin inflow into exchange platforms. Over 5,000 BTC entered these platforms potentially suggesting that large players were preparing for a sudden move in the market.

Despite the bearish trend Brian Pasfield, CTO at Bonded Finance, said the following on the recent crash:

(…) this is an opportunity for smart players because weak hands are spooked by newsbites and leave coins all over the floor to be bought up by the smarter players.

Bitcoin Holders Still Bullish, Why The Rally Could Have More Fuel

Checkmate noted a dropped in the funding rates, used to determine the percentage that long or short positions pay to the other side of a trade, have gone down significantly. As seen below, the analyst believes the market has deleverage.

In addition, the crash was unable to produce a spike in the Entity Adjusted Dormancy metric, used to measure the amount of the Bitcoin supply that exchanges hands in a specific period. Whenever this metric rises, BTC’s price follows with downside action at least in the short term.

This suggests that the market “has a preference for longer term holding”, as Checkmate said. In addition, the HOLD Waves metric, used to measure “age distribution” in the BTC supply suggest that the interest in the crypto market stands at an all time low. This correlates with “late-stage bear markets”, the analyst added.

The opposite is typically true in late stage bull markets (red) and cycle tops, where the maximum number of old coins are spent and transferred to new investors, attracted by hype, media coverage and price appreciation.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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