‘Classic top setup’? Bitcoin price crashes after all-time high on flash crack

Bitcoin (BTC) hit new-all-time highs on various exchanges on November 30, but one record, in particular, hits the headlines for a different reason.

Data from cryptocurrency exchange Kraken shows that BTC / USD hits its highest ever price on its order book – then pigeons at $ 16,600 per second.

The price of Kraken BTC dumps $ 3,000

The cause of the crash, which would have liquidated a large number of positions and caused considerable suffering to many speculators, was probably known as the “stop-loss run”.

Stop-loss runs include large-volume traders who deliberately place a certain sell order at a certain price point, then target where they think a large number of stop-loss positions remain. In this case, the target was, approximately, 16,600, near last week’s local low.

Selling the result is a cascade of pressure that delivers the result very quickly, if successfully guessed, only after the process is over will the market rebound after that.

Kraken XBT / USD 1 minute chart shows crash. Source: Trading View

Liquidity risk has always been a given factor in exchange trading, and the fact that a one-minute week of cryptocurrency falls below $ 3,000 is a good indication of why traders should be cautious around significant price points.

The second explanation, or perhaps the one that contributed to the event, is that investors preferred to exit around 000 20,000 to avoid the cost of a sudden reversal at the time of resistance.

Bollinger warns on the “classic top design”.

“Okay, time to pay attention, $ BTCUSD. It’s a classic top setup,” said John Bollinger, creator of the Bollinger Bands volatility indicator. Warned.

“There’s no confirmation yet and the setup can be easily overtaken, but prudent traders should wash their glasses.”

When asked by a Twitter user if this is a local peak or if the price of Bitcoin will come down from here, he replied “At the present time, a potential local peak …”