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Crypto Market Crashes on El Salvador’s Bitcoin Day, What Could be the Reason?

The crypto market faced one of the most volatile days in history as a severe flash crash took the market by surprise on El Salvador’s “Bitcoin Day.” Investors expected the world’s leading crypto to shine as El Salvador officially adopted BTC as legal tender on September 7.

The announcement should have been a fundamentally bullish moment for the king coin. Many market participants touted the historical development as a landmark event that would have massive implications on crypto adoption globally.  

However, BTC and most cryptocurrencies tanked as big-money investors rushed to cash in on the over-leverage market. The ensuing flash crash pushed the world’s first crypto as low as $42.9K on Tuesday. The sudden sell-off saw the BTC price shed up to $10K in minutes, which market experts attributed to massive whale dumping. 

That said, one analyst believes that the liquidation cascade could be healthy for the crypto market in the long term. Investor Daniel Cheung took to Twitter to downplay the correction. 

“$2.3bn in liquidations was healthy today, nothing to be concerned about, to be honest. Liquidations were consistent $7bn + near the end of the last run,” the analyst noted. 

The bulls have mounted a comeback in the last few hours to push BTC above $46.5K. At the moment, the prices are still unstable. 

Altcoins Hit Hard By the Intense Volatility Bout

Altcoins showed similar movement patterns to BTC as massive liquidations hit the crypto space on Tuesday. After leading the market rally in recent weeks, Ethereum suffered a devastating 11% loss on the daily chart. The crypto traded as low as $3,466 today.

Ether has now dipped to retest support after soaring to highs near $4k. The current price action prompted pseudonymous analyst Altcoin Sherpa to draw parallels to the market pullback in the Fall of 2020. At the time, ETH parried massive gains before entering an accumulation phase. The phase ultimately allowed bulls to reclaim fresh all-time highs.

Meanwhile, Cardano (ADA) also experienced the massive flash crash, dipping to the $2 level for the first time since mid-August. Other top altcoins such as Uniswap, Polkadot, and Chainlink are also trading in a sea of red. 

However, trader Nebraskan Gooner is advising investors not to be overly bullish or bearish for the time being. He argues that the current retracement could provide an opportunity for the bulls. This way, it would allow most crypto assets to bounce back to support.

Solana (SOL) and Fantom (FTM) Withstand the Bloodbath

Most leveraged players in the crypto market endured heavy losses on Tuesday. However, some altcoins managed to hold on to recent gains. 

According to a tweet from crypto analysis and monitoring website Santiment, FTM was among the best performers during the current market carnage. The utility coin of the Fantom project managed to eclipse its lifetime high of $1.64. FTM rose as the broader cryptocurrency market subsequently bled.

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Similarly, Solana (SOL) extended its rally in the daily chart, logging double-digit gains to change hands for $176.27 at press time. 

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