A possible “stop-loss run” triggered a one-minute candle to over $3,000 lower than BTC spot price before a rebound, in massive volatility on Kraken exchange. On November 30, 2020, bitcoin exploded to a new all-time high on multiple exchanges.

Bitcoin broke its all-time high of $19,783, in the process of overcoming its record set during the 2017 bull run. Since that time, the crypto has fallen back to trade around $19,200 but it is still volatile and changing by hundreds of dollars in minutes.

But looking at one record, in particular, headlines were made for different reasons. Data acquired from crypto exchange Kraken indicates that BTC/USD hit its all-time high price on its order book, then plunged to $16,600 within seconds.

Bitcoin Price Plunged Rapidly On Kraken After All-Time High 1
Kraken XBT/USD 1-minute chart showing crash. Source: TradingView

While bitcoin has gained 170% since the start of this year, the bull run started to gather steam in August, when a series of high-profile bitcoin investments pushed the crypto to record-breaking highs.

Kraken Bitcoin Price Dumps $3,000

The reason behind that crash which must have liquidated many positions and caused massive pain for many of the speculators might be what is known as a “stop-loss run.”

Stop-loss runs involve large-volume traders who intentionally place huge sell orders at a particular price point.

Then, they target where they believe a large number of stop-loss positions reside. In this scenario, the target on Kraken was around $16,600 near the location of last week’s local bottom. The result is a cascade of selling pressure that quite rapidly delivers the intended results if successfully estimated, just for the market to immediately rebound after the process is over.

Bitcoin Price Plunged Rapidly On Kraken After All-Time High 2

Mostly, liquidity risk is a given factor in exchange trading, and Kraken’s one-minute wick down by $3,000 aptly indicates why traders should always exercise caution around various price points that they think are loaded with stop losses.

Another explanation, or probably one that might have contributed to the event, was investors deciding to exit at near $20,000 to avoid the costs of an abrupt reversal at resistance.

Bollinger Warns over “classic top formation”

The creator of the Bollinger Bands volatility indicator, John Bollinger, warned:

“OK, time to pay attention, $BTCUSD. That is a classic top setup. No confirmation yet and the setup could easily be overrun, but wise traders should wash their glasses.”

When asked by a Twitter user if a local top was formed or whether Bitcoin’s price would go down from there, Bollinger said that, for now, this is a possible local top. In the meantime, Bitstamp also reached its local all-time high at $19,869, with the BTC/USD pair then plunging towards $19,000, a level that the crypto reclaimed a few hours ago. Binance meanwhile summarized:

“For those who are feeling bullish about #Bitcoin, today is the day you’ve been waiting for.”

Institutional Investors Praise Bitcoin Pushing It To An All-Time High

MicroStrategy invested $250 million into the bitcoin market on August 11, 2020, marking the start of institutional investments into the crypto. Later on September 8, the firm increased its investment to around $425 million.

Square then followed suit on October 8, investing $50 million, which is around 1% of the firm’s total assets. PayPal also joined the Bitcoin space recently. On October 21, the payments giant said that it would offer payment support for bitcoin and other cryptos. On November 21, PayPal had already purchased 70% of the BTC that had been mined over the last 30 days.

But, what mattered most to bitcoin’s explosive surge was the praise that came with the institutional investments. MicroStrategy said:

“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it.”

Since MicroStrategy’s first investment, its CEO Michael Saylor has turned into bitcoin’s most outspoken advocates.

Thus, signs indicate that abrupt drop and rebound on Kraken is a one-off occurrence localized on the exchange since the other platforms remained volatile above $19,000.

About the author

Wanguba Muriuki is an Editor at Large for E-Crypto News and author of the book- "The Exploitative Intrigues of Cryptocurrency Scams Explained." He is also a passionate creator who sees every aspect of life from a written perspective. He loves Blockchain, Cryptocurrency, Technology, and Traveling. He is a widely experienced creative and technical writer. Everything and everyone is describable. The best description is written.

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bitcoin
Bitcoin (BTC) $ 61,933.00
ethereum
Ethereum (ETH) $ 3,739.63
binance-coin
Binance Coin (BNB) $ 477.91
tether
Tether (USDT) $ 1.00
cardano
Cardano (ADA) $ 2.13
xrp
XRP (XRP) $ 1.08
solana
Solana (SOL) $ 156.28
polkadot
Polkadot (DOT) $ 40.82
dogecoin
Dogecoin (DOGE) $ 0.253933
usd-coin
USD Coin (USDC) $ 0.998079
USD
EUR
GBP
bitcoinBitcoin (BTC)
$ 61,933.00
ethereumEthereum (ETH)
$ 3,739.63
tetherTether (USDT)
$ 1.00
bitcoin-cashBitcoin Cash (BCH)
$ 602.37
litecoinLitecoin (LTC)
$ 182.61
bitcoinBitcoin (BTC)
53.394,61
ethereumEthereum (ETH)
3.224,07
tetherTether (USDT)
0,862135
bitcoin-cashBitcoin Cash (BCH)
519,32
litecoinLitecoin (LTC)
157,43
bitcoinBitcoin (BTC)
45,058.55
ethereumEthereum (ETH)
2,720.72
tetherTether (USDT)
0.727537
bitcoin-cashBitcoin Cash (BCH)
438.25
litecoinLitecoin (LTC)
132.86

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CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin62,369 0.30 % 2.07 % 13.99 %
Ethereum3,767.3 0.24 % 1.43 % 9.80 %
Binance Coin481.26 0.33 % 2.90 % 19.03 %
Tether0.9986 0.03 % 0.08 % 0.23 %
Cardano2.130 0.16 % 1.57 % 3.03 %
XRP1.090 0.26 % 3.13 % 4.11 %
Solana158.14 0.97 % 1.47 % 7.07 %
Polkadot30.87 2.19 % 17.29 % 10.73 %
Dogecoin0.2581 1.17 % 8.69 % 12.54 %
USD Coin1.000 0.14 % 0.20 % 0.17 %

bitcoin
Bitcoin (BTC) $ 61,933.00
ethereum
Ethereum (ETH) $ 3,739.63
binance-coin
Binance Coin (BNB) $ 477.91
tether
Tether (USDT) $ 1.00
cardano
Cardano (ADA) $ 2.13
xrp
XRP (XRP) $ 1.08
solana
Solana (SOL) $ 156.28
polkadot
Polkadot (DOT) $ 40.82
dogecoin
Dogecoin (DOGE) $ 0.253933
usd-coin
USD Coin (USDC) $ 0.998079