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Bitcoin (BTC) faced its strongest drop after a 70% bounce back since the mid-July levels. El Salavador buys the Bitcoin dip adding 150 additional Bitcoins.
After a mammoth rally over the last few weeks, Bitcoin (BTC) entered a sharp correction on Tuesday, September 7. In the last 24-hours, the Bitcoin price tanked 17% hitting an intraday low of $43,000. As of press time, Bitcoin is trading 13% down at a price of $45,431 and a market cap of $854 billion. In just a day’s time, the Bitcoin valuations have dropped by $150 billion.
Interestingly, the sharp drop in the BTC price came just on the day when Bitcoin became an official currency in El Salvador. But soon after the launch, El Salvador’s digital payment system Chivo crashed.
Many users reported that they were unable to install the app. The el Salvador government continued to buy the Bitcoin dip adding another 150 Bitcoins. With this, the government now holds a total of 550 Bitcoins in its Treasury.
Buying the dip 😉
— Nayib Bukele 🇸🇻 (@nayibbukele) September 7, 2021
“The process of #Bitcoin in El Salvador has been a learning curve. Every step toward the future is like this, and we will not achieve everything in a day, nor in a month,” Bukele tweeted. “But we must break the paradigms of the past.”
Tuesday’s correction was the first major correction after its 70% rebound since the mid-July levels. Besides, historical charts show that September has been the month of correction for Bitcoin and the overall crypto space. “It’s a bit of the speculative excesses being wrung out of the system,” said Bloomberg Intelligence’s Mike McGlone.
Major Bitcoin Price Liquidations amid Falling Valuations
As the world’s largest cryptocurrency tanked all the way to $43,000, it triggered widespread liquidations in the derivatives market. As per data from Bybt, over 43.54 billion in BTC price liquidations took place.
Amount of Liquidations in the past 24 hours by exchanges in total $3.54 was liquidated!
— CryptoDiffer (@CryptoDiffer) September 7, 2021
Volatility has been the very nature of the crypto market in its entire history. Speaking to Bloomberg, Valkyrie Investments CEO Leah Wald said:
“We’ve often seen in the past where many traders take profits at psychological levels including US$40,000 and US$50,000. The market tends to sell off as a result of limit orders placed just above these key price levels, or as a result of stop losses placed after surpassing them because people want to lock in profits should the market retrace.”
Citing similar reasons, analyst Michael Van de Poppe cited over-leveraged positions getting liquidated in the chain reaction. He added:
“Bitcoin lost that $49K level as crucial support and smacked through it. What just happened? Overleveraged positions getting liquidated in a chain reaction, causing a massive wick. If this wick closes above $47/48K, it will be an outlier. Opportunities”.
On the downside, Bitcoin (BTC) is facing strong support at $44,000. The next support will be at $42,000 after this.