On June 26, the bitcoin price suddenly crashed from $13,868 to $11,350 across major crypto exchanges including Coinbase, recording an 18 percent drop against the U.S. dollar.
While the factors behind the abrupt decline in the bitcoin price in the past 24 hours remain uncertain, Coinbase experienced a server outage as the dominant crypto asset dropped below $12,000 due to overwhelming user activity.
According to TokenData, Coinbase experienced an outage as the volume of the exchange surpassed $1.5 billion for the first time since February 2018.
Coinbase's outage happens on the day its trading volume exceeded $1.5B for the first time since February 2018..
— TokenData (@TokenData) June 26, 2019
As the bitcoin price dropped to the low $11,000 region, buyers in the crypto market bought up the dip swiftly, allowing the asset to recover beyond $12,000 within several hours, demonstrating solid demand from large buyers.
Why is bitcoin going up?
Earlier this week, global markets analyst Alex Krüger said that the rally of bitcoin is primarily being caused by the emergence of aggressive buyers with deep pockets.
The cause is simple: aggressive buyers crossed the bid-ask spread and overpowered both passive and aggressive sellers. Based on price action, there were aggressive buyers with deep pockets in action last night. There was no specific trigger known to anyone outside of them.
No specific trigger BTC last night. Just very large buyers. There has been a myriad of extremely bullish factors in place as of late, which include: new trading venues, parties front-running Fidelity/Bakkt/Ameritrade/E-Trade/LedgerX flows, Libra, and various macro narratives.
Previously, Three Arrows Capital CEO Su Zhu said that there are about $4 billion in funds sitting on the sidelines within the crypto market in the form of stablecoins and fiat to readily invest in the market.
Hence, the recent upside movement of bitcoin is likely to have been fueled by existing investors in the crypto market and the consistent inflow of institutional capital throughout 2018 and early 2019.
Institutions tend to invest with a long term thesis, especially when it comes to an emerging asset class such as crypto assets.
Krüger emphasized that since $4,200, the bitcoin price has rebounded with minor corrections along the way and that investors have to anticipate retracements in the near term even if the asset continues to demonstrate strong momentum.
“For BTC, price crashes are a feature, not a bug. Either avoid FOMO into positions and learn how to trade crashes, or become a long term HODLER (ideally with some form of risk management). Every single move since BTC broke $4200 has seen a large retracement, with the sole exception of the Apr/2 move. Retracements are useful for trading or for jumping onto the train for those who missed it. Eventually, there will come a retracement that fails. That’s life”.
Alternative crypto assets are struggling
As the bitcoin price dropped to $12,300, alternative cryptocurrencies in the likes of XRP, Bitcoin Cash, Litecoin, EOS, and Binance Coin recorded large losses against the U.S. dollar and bitcoin in the tune of 6 to 12 percent.
The crypto market is seemingly still largely dependent on the near term trend of bitcoin. Many traders have anticipated the formation of the so-called “alt season” upon a bitcoin retracement but in recent weeks, bitcoin has consistently outperformed most alternative crypto assets.
Click here for a real-time bitcoin price chart.