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| BTC dropped sharply in the spot market as crypto prices saw a sudden sell-off. |
At that time, BTC was trading at around $47,000
The price of Bitcoin plunged early Saturday, falling almost $10,000 in around an hour to a temporary low of $42,000 before bouncing back to $45,000.
Bitcoin had fallen around $15,000 over the past 24 hours. Ether, the second-biggest cryptocurrency by market capitalization, fell around $1,100 during the same time period.
The leading cryptocurrency reflected a wider drop in crypto markets, as indicated by CoinDesk's price index, with some cryptocurrencies falling over 20% over the past 24 hours. Most of these assets seemed to have experienced a sharp decline beginning around 04:00 UTC Saturday.
As indicated by CoinGecko, the overall market cap was hovering around $2 trillion.
Spot market selling appeared to have driven the cryptocurrency lower before setting off large stop-loss orders in the derivatives markets.
"So far I've seen as much as 4000 BTC being sold that pushed the market unexpectedly down," Laurent Kassis, a crypto exchange-traded fund expert and director of CEC Capital, said. "Indeed, 1,500 BTC alone was sold in under a minute at the time of the drop."
The information followed by Coinglass showed the price drop had triggered almost $600 million worth of Bitcoin futures positions in under 60 minutes. The market appeared over-leveraged recently, with open interest (OI) raised in Bitcoin terms.
"The Bitcoin-denominated OI has now stayed over 365,000 BTC for over a month. It isn't normal to see such a high OI being supported for the long term. This could suggest that the market is already oversaturated with leverage," Arcane Research's weekly note published Tuesday said.
Tether (USDT), the world's biggest stablecoin by market value, saw a brief spike to $1.025 on the Nasdaq-listed Coinbase exchange, moving away from its standard 1:1 peg.
During sharp price declines, traders usually treat Tether as a safe-haven asset, given its value is fixed to the U.S. dollar, a traditional market risk-off asset.
The crash to the lowest level since late September came after uncertainties caused by the Omicron variant of COVID-19 and the Federal Reserve's (Fed) growing concern about high inflation. On Tuesday, Fed Chair Jerome Powell retired the word transitory from the inflation discussion and said that the central bank should think about reducing support faster.
At the same time, some were using this fall as a chance to "buy the dip." El Salvador President Nayib Bukele, whose country holds Bitcoin on its balance sheet and has bought coins during past dips, announced another purchase of 150 BTC for around $48,700 each.
El Salvador just bought the dip! 🇸🇻
— Nayib Bukele 🇸🇻 (@nayibbukele) December 4, 2021
150 coins at an average USD price of ~$48,670 🥳 #Bitcoin🎄