OKCoin Exec: Bitcoin Tanked Because Traders Are Traders
Bitcoin (BTC) lost over $1,000 on some exchanges on June 2, although the event seems to happen because of standard traders’ activity, according to OKCoin’s head of market development Matthew Ficke.
“Price movement like we saw yesterday typically attracts short-term traders trying to position for a larger break higher,” Ficke stated of the day prior, when Bitcoin broke $10,000.
Bitcoin pumped and then dumped
Bitcoin’s price surged past $10,400 from $9,450 on June 1, only to fall back down to $9,275 on the next day. The first asset even fell below $9,000 on some exchanges, reaching $8,600 on BitMEX.
Ficke said the $10,400 price level is an important zone historically. Since fall 2019, Bitcoin has visited this zone three times, unable to break past with significant staying power.
“It is likely that short liquidations were triggered nearby,” Ficke explained of the June 2 action. “Active traders positioning for breaks often manage risks by setting nearby stop levels,” he said, referring to stop-losses — levels traders set in advance which automatically close trading positions at a loss, preventing further losses.
The OKCoin exec further stated:
“Unless momentum carries the market higher, their long positions can quickly become vulnerable. This dynamic can exaggerate short-term price volatility.”
Ethereum stands tall in bullish market
In terms of recent bullish crypto prices, Ficke said Ethereum (ETH) could be a catalyst of the action. Since Bitcoin’s halving a few weeks ago, the asset’s market dominance has decreased.
“More attention was brought to crypto as an asset class, and the increased awareness seems to be bearing fruit now,” Ficke noted. The OKCoin exec also suggests that ETH 2.0 will drive hype.
In addition, Bitcoin’s recent spike upward made sense in light of the current U.S. economic and public instability, he stated, adding:
“Some argue the environment reminds the market that BTC can act as a hedge against excessive government influence. As equities are near pre shelter in place levels, many seem to view crypto as relatively attractive.”
Regardless of the reasons, crypto asset awareness rises, which is seen in several categories, including increased interest noted by algorithmic trading company Floating Point Group.