The crypto markets went through a high flash crash last Tuesday when the gauge of the cryptocurrency prices suddenly went into sell territory. The prices plummeted for all of the cryptocurrency networks, including the BTC bitcoin token, unraveling much of the gains that were had in the retail trading sessions of the previous weeks. All of these events took place before the much-anticipated El Salvador’s introduction of bitcoin as a fully defined legal tender in the country. For most, the same process equated itself with hugely bullish news that will further prop up the prices in the coming days.
Some even speculated that the moment when the day comes, the prices will surge up on all of the media hype, and the actual spending that the country’s financial institutions like its central bank will take on. However, the exact opposite happened, despite the fact that El Salvador did purchase a substantial sum of BTC tokens. Now, as the markets slowly come to terms with what happened, most are desperate to figure out why the crash took place in the first place and more importantly, where are the markets heading next in the wake of El Salvador’s historic financial introduction.
Together, all of the cryptocurrencies in the world saw their combined market capitalization fall to about 1.9 trillion USD last Tuesday. That is nearly a loss of 15 percent in a single 24-hour period. The losses made up to around 410 billion USD, which is a stunning amount of money for any digitally-based collection of ventures. However, like esports and social media, the upheavals in this domain are both faster and more violent than those which usually take place in the regular markets. When it comes to individual cryptocurrencies, the bitcoin BTC token led the way in terms of overall market cap losses, which is expected in absolute numbers, where this network has the secure lead.
It dipped beyond 15 percent and reached a price of below 43,000 USD. That was its lowest in three weeks, which quickly infused worry about future slides. On networks like Twitter, theories about further drops quickly came about, with some seeing that the 30,000 USD region will follow soon. However, that did not happen. The BTC token quickly paired the slide and regained much of the losses in a matter of a few hours. It rose to nearly 47,000 USD, ending the day at around a 9 percent drop than on Monday.
The devastation of the previous flash crash was not limited to bitcoin, just like it never is. Ether, cardano, and binance coin all plunged some 15 percent on average. The only altcoin to increase its value throughout all of this is Solana, which is a token that recently came into the limelight. It climbed some 8 percent in the midst of the crash, which added to a rise of over 35 percent in the previous several weeks. So, the fallout was widespread. Apart from Solana, which managed to dodge the bullet completely, every other digital currency suffered substantially in terms of both market cap and price. To complicate an already unclear picture, the President of Els Salvador, Nayib Bukele, announced that his country will react to this upheaval.
El Salvador Buying the Dip
On the same day that the crash occurred, Bukele stated that his nation will do what no other country in the world ever did and publicly announced that they are buying the dip. El Salvador quickly bought an additional 150 BTC. That took their overall holdings to 500 BTC tokens in total. Their current value is in the ballpark of 25 million USD. However, issues with that began on the technical side, with the national digital wallets not working properly and causing issues to their owners. With technical difficulties multiplying fast and strong, the country had to pull its digital wallets offline temporarily.
The same event worryingly mirrored those that took place on the international level with private companies that offer crypto services. These primarily included digital exchanges that went dark one after another in rapid succession. That created an almost independent level of outrage among the crypto users across the globe, especially those who were looking to try to capitalize on the massive price swing.
Crypto Exchanges going Offline
All of the turbulence with the crypto prices expectedly came with a lot of heightened trading volume. Networks like ethereum saw traders and investors enter the market with each new step on the downwards spiral. So, there was a lot of action at 3,800 USD, followed by 3,600 USD, and all the way to the bottom of the flash crash. That was around 3,200 USD, which allowed the same buyers to make a 5 percent ROI just hours later. However, many did not get to purchase and sell their cryptocurrency tokens in this period because many big cryptocurrency exchanges went offline.
That includes Kraken and Gemini, but also the biggest one of them all, at least in the US – Coinbase. The same issues fueled a lot of anger online among all manner of users, including the biggest whales and institutional investors. In the case of the Coinbase offer, even Coinbase Pro, which caters to the institutions and corporations, was unavailable for these services. For the more cynical, the same outage was completely expected, as they occurred in the past as well in moments similar to this one.
Despite all of the dramatic movements in the crypto market and the excitement about El Salvador’s introduction of bitcoin tokens as legal tender, some things did not change because of this flash crash. These are the current strong fundamentals of the entire crypto domain, but especially bitcoin and ethereum. Both networks are presently in better shape both technologically and financially than they were just a few months ago, during the May crash. Because of that, there is little doubt that if all things remain the same, bitcoin will soon once again explore levels about 50,000 USD.