Bitcoin Flash Crash Slows Down Advances

Ever since Bitcoin shifted into its newest bull run, we’ve been fearfully awaiting some sort of a market correction. It seems as if today has brought this drop, with Bitcoin losing about $2,000 in value in just a few hours.

This almost 10% drop also came with some outages across exchanges such as Coinbase, which confirmed that they had cleared $1.5 billion in trading activities on June 26th. They’ve hit these levels before, but that was in October 2017, when the last bull run occurred.

History Repeating Itself

The previous uptrend in 2017 experienced similar corrections, so this isn’t necessarily a point of worry as much as it is some “rationality” entering the market. Bull runs that are powered solely by exuberance lose their steam more quickly, and with analysts making stratospheric price predictions, there needs to be some balance in the market for this trend to last. Pullbacks are a natural component of any market cycle, and should not be seen with extreme concern.

Our current bull market seems to be performing much differently than 2017’s, and it now seems probable that Bitcoin’s price is going to break through the previous all-time highs. This is evidenced by the “whales” who are moving money into Bitcoin. It is no longer just a retail investor movement, and analysts at JP Morgan see this as an institutional trend as well.

Bitcoin’s market capitalization is now nearing the $200 billion, which is another major milestone for traders and investors to consider. Another thing that makes this current bull run special is that altcoins haven’t followed suit. In previous bull markets, the overall market tracked quite consistently, as it was a general push within the industry. Instead, Bitcoin seems to be taking off.

Why Are We Seeing This Now?

The reasoning behind this is not immediately clear, but there are some hypotheses that make sense. One simple explanation is that bullish buyers are overwhelming all the sellers in the market, which naturally pushes the price up. Additionally, there are the larger buyers we’ve already discussed above.

These things eventually turn self-perpetuating, especially as more retail investors come on board, and the trend turns more euphoric.

From a macroeconomic perspective, Bitcoin is also benefiting from several big announcements. The Federal Reserve recently announced their intention to cut interest rates again starting in July. Additionally, the European Central Bank seems as if they are about to initiate new bouts of quantitative easing, which does not bode well in a world where negative interest rates are already becoming prevalent on $13 trillion of government debt.

Gold has also experienced an uptick in price, breaking through the $1,400 price level last week. Gold companies seem to be faring well, and would likely benefit from similar trends to Bitcoin.

So even though Bitcoin is now trading around $11,500, it is one of the few markets trading absolutely independently of policies being implemented by any central bank. If there was ever a time where this mattered, it would be now.