Classic top configuration‘? Bitcoin price falls quickly in the Kraken after winning historical high
A likely „stop-loss run“ fired a one-minute candle to over $3,000 below the Bitcoin spot price before a recovery, in extreme volatility.
Bitcoin (BTC) reached a new historical record in several exchanges on November 30th, but one record, in particular, made the headlines for a different reason.
Data from the Kraken cryptomorphs exchange show that the BTC/USD reached its highest price in its order book – so it dropped to $16,600 in seconds.
Kraken price drops $3,000
The reason for the crash, which liquidated a large number of positions and caused considerable pain to many speculators, was probably what is known as the „stop-loss race.
Stop-loss races involve large volume traders intentionally placing large sales orders at a specific price point and then targeting where they think a large number of stop-loss positions reside. In this case, the target was around US$ 16,600, close to last week’s bottom.
The result is a cascade of sales pressure that delivers the result very quickly, if successfully estimated, only for the market to recover later once the process is completed.
1 minute Kraken XBT / USD chart showing the accident.
Liquidity risk is always a certain factor in stock market trading, and the one-minute Kraken drop of $3,000 appropriately demonstrates why traders should be cautious about significant prices.
Another explanation, or possibly one that contributed to the event, was that investors chose to exit for nearly $20,000 to avoid the costs of a sudden reversal in resistance.
Bollinger’s Band Indicates „Classic Top
„OK, time to pay attention, $ BTCUSD. This is a classic top setting,“ warned John Bollinger, creator of the Bollinger Bands volatility indicator.
„No confirmation yet and the setting can be easily overridden, but wiser traders should wash their glasses“.
When asked by a Twitter user if this is a local top or if the price of Bitcoin will fall from here, he replied that „For now, a potential local top…“
In addition to Kraken, however, Bitstamp also reached its own record of $19,869, with BTC/USD falling to $19,000, a level that the pair recovered only a few hours ago.
„For those who are optimistic about #Bitcoin, today is the day you’ve been waiting for,“ summed up Binance.