If on September 6 the price of Bitcoin reached its highest price since May, then September 7 was terrible for Bitcoin. In just three hours, the price of Bitcoin dropped by almost $4500. The price reached a low around 42830 dollars. Today, during the Asian session, the price continued to decline, but with the beginning of the European trading session, the price began to recover and at the time of publication, Bitcoin is trading at $46400.
Within 24 hours, $3,5 billion was liquidated. The largest liquidation was recorded on the Huobi exchange. An order with a face value of $43 million was liquidated. However, the largest number of liquidations was recorded on the Bybit exchange.
Interestingly, yesterday Salvador officially accepted Bitcoin as a legal tender in the country. And it would seem that the price should have gone up. But something went wrong. According to experts, the futures market is largely to blame. Bullish positions with excess leveraged environment triggered Bitcoin’s fall. A small change in the spot market could have triggered multiple orders for liquidation. This, in turn, triggers a kind of butterfly effect where more people start selling to get out of their positions, causing more liquidations.
However, some analysts argue that the market has not been overly leveraged. Bullish orders were not enough to cause such a decline in the futures market, no matter how involved. Open interest and funding rates were within normal limits.
What really happened. What caused such a sharp decline in the price of Bitcoin, we will find out soon.