The Bitcoin price just dropped below the $9,000 level, hitting $8,964 on BitMEX. The sentiment around the cryptocurrency market noticeably declined after BTC rejected the $10,000 resistance level three times in a span of 15 days.
What’s triggering the trend reversal?
Within a span of minutes, BitMEX recorded around $83 million worth of long liquidations from 226 positions. Briefly, before dropping to sub-$9,000, the Bitcoin price spiked to $9,275, trapping a large number of longs before plummeting by around $300 within less than 30 minutes.
The bear trap caused a large short-term downside movement, creating significant volatility within hours. But, the main catalyst behind the plunge in the Bitcoin price from $10,500 to $8,000s in the past two weeks has been the rally itself.
The Bitcoin price increased at a rapid pace from $6,410 to $10,500, by around 63 percent against the USD.
As noted by several whales — individual investors who hold large amounts of Bitcoin — the rally was not backed with sufficient fiat inflow on spot exchanges and over-the-counter (OTC) trading platforms.
The upsurge was primarily fueled by spoof or fake buy orders at key support levels, inorganically pushing the price up. Spoofing is not legal in the stock market, made illegal in the U.S. by the Dodd-Frank Act of 2010 under Section 747, as it is considered to be a blatant attempt at manipulation.
Whether the upsurge was purely a result of manipulation from start to finish remains unclear, but the pattern of spoof orders at key levels indicates that spoofing was responsible for most of the upsurge.
When the Bitcoin price goes up at such a fast pace in a short period of time,