In a recent video, renowned crypto analyst Coin Bureau offered an in-depth analysis of the significant drop in the cryptocurrency market. With stock indices such as the S&P 500 and NASDAQ having continued to trade sideways, it seemed that the cause of the crypto crash had been specific to the crypto sector.
According to Coin Bureau, over 250 million of leveraged long positions were liquidated, with nearly 200 million of these coming from traders who had bet on Bitcoin’s price increase. The initial decline in Bitcoin’s price had been more significant than major altcoins like Ethereum, which only started to fall a day or two later.
Coin Bureau has suggested that the cascade of long liquidations began after Bitcoin’s price had started falling, possibly due to market sentiment becoming too bullish. The fear and greed index for crypto had been signaling greed for a couple of weeks, which some traders might have interpreted as a contrarian indicator to sell. This selling may have triggered the long liquidations and further decline in crypto prices.
From a technical analysis perspective, it was not clear whether the crash had been a standard correction or the beginning of another leg lower. However, Coin Bureau emphasized that cryptocurrencies would not approach their previous highs without institutional investment. Regulatory uncertainty and the closing of crypto-to-fiat ramps, such as Silvergate Bank’s SEN, had discouraged institutions from directly investing in cryptocurrencies.
Despite this, the popularity of paper derivatives on traditional exchanges like the CME had continued to grow, indicating strong interest from institutional investors. Coin Bureau also highlighted the ongoing regulatory scrutiny of stablecoins, which were essential for institutional investors to easily move large amounts of money in and out of the crypto market. As stablecoin issuers faced increasing pressure and uncertainty, the crypto market’s future remained uncertain.
