After skyrocketing and then crashing back down last year, Bitcoin has had an excellent 2019. Starting the year at a price of about $3,800, it hit a high of over $11,800 in June, and had continued to trade between $9,000 and $10,000.
That was the case until this past Tuesday, when in little over an hour, Bitcoin dropped more than 10% to $8,478.71, and continued sliding from there. By the end of the day, it was down more than 14%, and as I’m writing this, the benchmark cryptocurrency is down over 20% for the week.
After such a good eight months for Bitcoin, this “flash crash” took many traders by surprise. So it’s no wonder that pages and pages of explanation have been written. Everything from technical anomalies and futures contracts to manipulation by shadowy organizations has been blamed.
But sometimes, the answer to a complex problem is actually quite simple, especially to us traders.
D.R. Barton, Jr.