“Classic superior configuration”? Bitcoin price flash crashes on Kraken after record high

Bitcoin (BTC) hit a new all-time high on various exchanges on November 30, but one high, in particular, made headlines for a different reason.

Data from the Kraken cryptocurrency exchange shows that BTC / USD hit its highest price ever on its order book – then dropped to $ 16,600 in seconds.

Kraken BTC price drops by $ 3,000

The reason for the crash, which will have liquidated a large number of positions and caused considerable pain to many speculators, was probably what is called a “stop-loss”.

Stop-loss races involve high volume traders intentionally placing large sell orders at a specific price and then targeting where they believe a large number of stop-loss positions reside. In this case, the goal was around $ 16,600, near the location of last week’s local fund.

The result is a cascade of selling pressures that delivers the result very quickly, if estimated successfully, only for the market to rebound after the process is complete.

Liquidity risk is always a given factor in stock trading, and the Kraken’s one-minute drop of $ 3,000 rightly shows why traders need to be cautious around large prices.

Another explanation, or perhaps one that contributed to the event, was that investors chose to exit close to $ 20,000 in order to avoid the costs of a sudden reversal to resistance.

Bollinger warns of ‘classic top formation’

“OK, time to be careful, $ BTCUSD. This is a classic high-end setup,” John Bollinger, creator of the Bollinger Bands Volatility Indicator, warned.

“No confirmation at this time and the setup could easily be out of date, but savvy traders should wash their glasses.”

Asked by a Twitter user if this is a local top or if the price of Bitcoin is going to drop from here, he replied that “For now, a potential local top …”