Disclaimer for the feds: I never owned any crypto, never traded any crypto, never made any profit and this post is purely for entertaining purpose only. This is not a financial advice.

Introduction

In this post I want to give you a quick, simplified & short summary of why exactly it dropped and whether the drop matters.

BTC drop below 29k - a 1.5 Billion OI flush in minutes

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https://preview.redd.it/qeq8023boydb1.png?2560&format=png&auto=webp&s=957159e212231d0350a20b7a14b3c724d2df12b0

Taking a look at the chart it's pretty clear what exactly happened. A heavy spot sell off ignited a larger liquidation cascade wiping out over 1.5Bn Open interest, Liquidated ~$9 Million USD all in minutes.

The spot CVD suggest a continouing sell off. In the meantime, the open interest spiked back.

Degen Money as a major driver

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Interesting to look at is the quick open interest reversal suggesting a lot of leverage entering the markets with an unstoppable trend. Right now the Open interest is 200 million higher than before the dump. Shorts are covering, bounces happen. Looking at fundings it's pretty clear that a lot of longs got wiped out but also many shorts entered the market. The entire structure suggest that after the move tons of positions were opened betting on both directions - expect more volatility to come.

Who is selling?

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https://preview.redd.it/x3fy2gcdoydb1.png?2554&format=png&auto=webp&s=8e9266d60c31074de5a640617c828f61418753f9

It's widely known that Coinbase is used by institutions to handle their Bitcoin investments. So whenever I want to find out who's selling I pay attention to the Coinbase CVD & look for divergence compared to the aggregated CVD.

And it does say a lot! The CVD since the dump is on a steady rise suggesting a heavy selling into limit orders. This is most likely caused by Coinbase providing liquidity / market make at current price for a larger entity cashing out thousands of BTC.

Also interesting & visible to look at considering the outstanding high volume at $28,900 suggesting strong support & bidding against the sell off

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https://preview.redd.it/om6uhqfeoydb1.png?2549&format=png&auto=webp&s=96963956c061f6c9397b8798026b68ea81275ced

AND WHY?

Honestly? Because Crypto is being Crypto. In fact, this is just normal volatility in my book. I know we all had a very calm crabbing over the last months and BTC rarely moved drastically into a direction without bigger news hitting the market. But looking back in time towards 2018-2021 this volatility was just an every day scenario for Crypto.

So... they sell for no reason?

No but it's just a normal market behavior of a larger player most likely lowering their risk exposure with the upcoming week. There are important macro events ( PCE, more earnings, FOMC 25 BPS rate hike... ) this week so it doesn't suprise me to see profit taking happening ahead.

BTC broke below the range lows & it's a normal market psychological reaction to see it as a sell signal. At the end of the day price is driven by supply & demand so always expect high volatility being a posibility independenlty from news

If you are interested to look what the future speculative value brings to the market feel free to look up the obvious contenders for new directional signal include:

- US equity market ( Tech was close to ATH and bad earnings might fuel a further correction which might have a risk off reaction in crypto )

- further development of regulations ( example clarity around Binance & DOJ but also other security related topics )

- Grayscale Bitcoin fund court ruling

- macro releases ( PCE, FOMC, GDP, Jobless claims just this week ) / economic correlations

- ARK ETF

Hope you enjoy the short post and let me know your thoughts!