Bitcoin and “Flash Crash”: that September 7, the price of Bitcoin dropped by almost 20% just before it managed to stabilize above 37 thousand euros, but failed to reach its maximum peak of 45 thousand. It was the worst daily close since May 19: in less than an hour, in fact, BTC positions have undergone over 2.2 billion euros in liquidations while the price continued to fall to a minimum of around 36,800 euros. 300 billion, on the other hand, was wiped out of the total market capital in a couple of hours.
The so-called “Bitcoin Day”, the day in which the currency officially became legal in El Salvador, caused several deviations in the market, while the altcoins recovered more quickly. Bitcoin, however, continues to lead the sector and move in a thin range between its support and resistance line after the sell-off. Regardless of its short-term weakness, MicroStrategy continued to increase its holdings. The company, currently one of the most active institutional players in the cryptocurrency sector, has announced the purchase of 5,050 bitcoins bought at an average price of around 40,000 euros per coin. This increased the company’s stock to 114,042 BTC, at an average price of around 22,800 euros per coin.
So let’s go and see, a scenario analysis, according to what happened, drawn up by Orlando Merone, the country manager for Italy of the Bitpanda company.
The global situation through the review of some example situations
Bitcoin becomes legal in El Salvador, Ukraine regulates cryptocurrencies – El Salvador, an economically unstable country to the point of not having its own currency and relying on the US dollar, has made Bitcoin a legal currency within national borders. In other words, no one is currently allowed to refuse a BTC payment. Soon after, the Ukrainian parliament passed a bill to legitimize and regulate cryptocurrencies within the country to attract investment. According to the ministry of digital transformation, Ukraine intends to open the cryptocurrency market to businesses and investors by 2022. Both news only confirm the trend of increasing adoption of cryptocurrencies.
Cardano smart contracts are successfully launched – On August 12, Cardano successfully completed the Alonzo update. The Alonzo fork allows you to write smart contracts for Cardano using Plutus scripts, facilitating the creation and execution of smart contracts on the public blockchain for the first time. The ADA token saw a slight drop in price after launch, but this is mainly due to the fact that the price was much higher than usual before the event.
The correlation and “movement dynamics” between Bitcoin and Altcoin
Bitcoin’s drop below 40,000 euros sent altcoin prices in free fall, wreaking havoc among industry analysts. In any case, market sentiment is still positive, indicating that it may have been just a hitch before a continuation to the upside.
Polkadot is up about 35% over the weekend, surpassing DOGE and becoming the eighth largest coin with a market cap of 28 billion euros. The network’s native token, DOT, is now trading around € 32, the highest price since May 18. DOT is also doing well against BTC after hitting its support line at 0.00035BTC, which catapulted the price higher to 0.00083BTC in the past few days.
ETH turned bullish, following the movement of Bitcoin. It has risen to the upper resistance level of its downtrend channel, which has been forming in the past few days.
TRON too it is moving in a bullish direction and creating some price spikes. The foundation is growing rapidly, boasting over 53M and processing 2.4B transactions. The TRON token changes hands at around € 0.11 and gained around 15% last week.
The price of IOTA reached an intraday high of € 1.72. This surge of interest in the project came after the protocol integrated the Hornet update, which brought back the auto-peering feature and integrated a faucet plugin with the Hornet node.
While Bitcoin’s dominance has shrunk to near all-time lows, the “altseason” indicator is signaling that the momentum of altcoins may continue.