Why is Crypto Crashing

Well, holy smokes. What's going on with

crypto? Just in the last 60 minutes, we

had over a hundred million dollars of

Bitcoin, Ethereum, and alts liquidated.

We're at $260 million in liquidations so

far today at the time of this recording,

and we still got another 9 hours to go.

This is the largest set of liquidations

that we've seen since August 4th and 5th

per Coin Glass. And more than $1 billion

worth of Bitcoin, 70 uh or sorry, 17,000

Bitcoin coins uh have been sold in the

last 75 minutes as well as about $380

million in Ethereum. Why is this

happening and what is it doing to the

alts and what's happening in the stock

market? What does the chart look like?

Let's talk about all of it in this

video. Okay. Wow. Well, here's the

chart. First of all, we've got last 24

hours here. Bitcoin was down as much as

six. Ethereum as much as 9. We've got a

little bit of rebound going on. This is

Coin Market Cap. You can see a bit of a

rebound here. I want you to see the

technicals. As soon as we lost that 617

line, which I'm going to zoom out to the

hour here just so you could see the

magnitude of this. First of all, this

right here was the Powell pump, right?

So, there could be some uh Powell pump

profit taking. But as soon as we lost

638, not a surprise, we bounced all the

way down to 617. Okay, easy technicals

here, right? But this gap down is just

nuts. We are in no man's land right now.

So, we should be crawling back up to

60K. But there's a larger problem when

we see these sort of fluctuations

in the time of the market that we're in.

It's worth being prepared about those or

for that problem. Talk more about that

in just a moment. Uh but look at this.

Uh BTC now uh 595, Ethereum 2461, you've

got Salana down about uh 6.39, XRP down

four, Doge 6.4, got Avalanche down 74,

Chain Link 7,

five, Sheeb 6, kind of all in this

little mixed range here. And then of

course you got a few that are uh that

are actually up like Ton or otherwise.

But uh let's understand for a moment

some of the potential risks that could

be happening here. Uh and mind you there

will be broader implications when you

get a crypto sell-off. We saw NASDAQ

futures follow crypto down about 30 pips

here unchanged on the 10-year though we

usually don't really see any kind of

modifications or changes in future

trading for uh the 10-year for as long

as we do on uh on on stock futures. In

other words, futures on treasuries close

a little earlier. So, uh, let's

understand this for a moment. There are

a few reasons we might see a sell-off

like this because right now it doesn't

appear that there's a very clear

explanation for this other other than

maybe a whale that sold some form of

large institution or a country or uh

someone with access to a lot of Bitcoin

that sold and basically they triggered

liquidations and margin calls. Okay,

that's normal. This this is a normal

feature. It trades 24/7, so you're going

to have lower liquidity. Yes. But could

there be other reasons as to why we

might see some of this selling pressure?

And quite frankly, a thinner order book.

That's the big one right here is what is

the order book look like? Well, to

understand the order book first, I like

to consider psychology. If you zoom out

on the week chart for Bitcoin, obviously

we're well up from 22, but we've really

been capping out. You know, we hit our

first peak when we had the ETF approval

for Bitcoin. Uh and then we had a slight

second and third peak after that. One of

those was after uh Donald Trump was uh

hyping up Bitcoin at uh at at the

Republican National Convention. Uh but

the question is how full is the order

book of buyers? And this is actually a

big problem because even though people

are very optimistic about inflows into

cryptocurrencies, most of the inflows

we're seeing right now are into Bitcoin

ETFs. Daily Ethereum ETF inflows have

been very, very low. Kind of actually

disappointing relative to what folks

were expecting. You are still getting

Bitcoin inflows, which is good, but

those Bitcoin ETF inflows are really

only going to occur during market hours.

This means Bitcoin could be most

volatile outside of those market hours

because you don't have institutions

working to buy up more Bitcoin. So, if a

country or an institution or somebody

sells after stock market hours, you

don't necessarily have that ETF buying

pressure that you would during market

hours. This makes the order book more

thinly traded, which basically means

somebody goes in and says, "Hey, I got

to sell 17,000 Bitcoin." And they throw

in a market order, they're just going to

go ding ding ding ding ding ding ding

ding ding ding and potentially knock out

two to $3,000 worth of Bitcoin uh uh you

know, buyers basically who are willing

to buy. In other words, if somebody puts

in a market order to sell, you're going

to keep going through ding ding ding

ding ding ding uh until you actually

trigger people's limit orders to buy.

And when I see larger fluctuations like

this, it's a sign that there just aren't

that many buyers. Now, I would have

expected that there would have been more

buyers at 60,000. So, I'm a little

surprised. Even though 60,000 is not a

line on my technical analysis, it is a

psychological threshold. And really, I

mean, we in 1 minute gapped from 611 all

the way down nearly $800. A straightup

gap down. In other words, there was not

a single buyer in that range of those

sold Bitcoin. Uh, and it wasn't until

you got to just over 60K that you found

buyers and you didn't find more buyers

until you got down to 58,000.

That again to me is a sign people aren't

putting in that many buy orders right

now. Why would people not have open buy

orders for Bitcoin? Well, this is where

we get to possible explanations. There

are a few things obviously going on in

this market that we need to know about.

Number one, recession derisking.

Yes, we might not have a recession. Yes,

we might have a recession. I I I know.

Okay, everybody picks their side of that

aisle. Okay, I personally think if the

Fed moves too slowly, we will guarantee

a recession. Unfortunately, I believe in

this cycle, very few assets are going to

be safe if we do hit a recession. Most

assets are going to fall with the

exception in my opinion of yield

sensitive uh specifically like bonds.

And I'm not trying to say interest rate

sensitive like Tesla. Actually, I think

Tesla, well, I made a video about Tesla.

Okay, go watch that one. The second

thing is we're now less than 24 hours

from Nvidia, which does mean there's a

potential we could be seeing Nvidia

de-risking for Nvidia earnings because a

lot of folks see that, okay, we're going

into Nvidia earnings, first earnings

postsplit. The highest volatility going

into earnings that we've had in the last

three earning sessions. The last three

earning sessions, we had uh Nvidia up

40% within a few weeks, 20% within a few

weeks, and flat within a few weeks. Not

in that order. Actually, I'm pretty sure

it was 20, flat, and 40. So, it shows

you there's really hard predictability

here. Uh Wall Street is expecting them

to beat estimates by 2.7%. So, they're

not looking for a big beat here. But if

we get bad news on Blackwell and future

growth rates, there could be selling

pressure that echoes throughout the

entire industry uh or or basically the

entire market which is expected to take

Bitcoin and other crypto assets with it.

Now, do keep in mind there's also this

potential Chinese bomb where some folks

are expecting an avalanche of selling

and offloading of US dollar denominated

assets by Chinese companies, potentially

offloading anywhere between 500 billion

to1 trillion in US denominated assets.

Okay, in plain English, yo, the Chinese

about to sell and dump a bunch of crap.

And the Chinese yuan may be going up as

the dollar goes down and as interest

rates go down. The Chinese going to dump

a bunch of crap, especially US stocks

and bonds, which could potentially force

the Fed to have to buy bonds. It's it's

all a mess. Now, crypto is not dollar

denominated because you could denominate

in whatever currency you want. Uh so

that shouldn't be directly affected by,

you know, the dumping of US stocks, but

typically when the US stock market sells

off, Bitcoin does go down with it. So

that could be related. You know, there

are murmurings that, you know, this

Chinese offloading could play out in a

similar or worse way to the Japanese

carry trade. Though it's not exactly

clear if that's going to happen, why

that would happen. You know, some people

say, "Oh, the Bank of China will step in

to buy dollar liquidity." No, I don't

think so. In fact, the Bank of China is

probably quite frankly very fearful that

the United States kicked Russia out of

Swift and froze their dollar assets. uh

as soon as they invaded uh Ukraine. So

if China actually remotely thinks they

might want to invade Taiwan, they don't

want any dollar assets. So no, they

ain't buying the dollars. So they're

going to sell your dollars. So uh yeah,

there there is this potential. It's

really a topic for a different video,

but there's this potential of frontr

running Chinese dumping of US assets,

bonds, and stocks could affect crypto.

So maybe there's a hedge fund or

somebody who just dumped a bunch of

Bitcoin and Ethereum because they're

like, "Hey, we got to derisk again."

You've got election uncertainties coming

up. Kamla is probably not going to be

great. Whereas Donnie T is probably

going to be better for crypto. We

already expect that, but now we got a

neck-and-neck race. So some of the

Trump's definitely going to win. Pump

Bitcoin enthusiasm has faded for now.

Obviously, when the facts change, you

got to change your uh you got to adapt.

All right. Uh so uh recession

de-risking, election d-risisking, Nvidia

derisking uh and uh and then we have

Chinese liquidations.

I'll call it Chinese liquidations

derisking. It could also be cash

building to buy the dip post an Nvidia

dip if there is or it's just profit

taking postpow. Uh but and and I realize

this is just the minute chart, but the

fact that we're not recovering really

well above 59,000 here in no man's land

is a little bit of a bearish leading

indicator to me. I do see TLT trading up

12 basis points in after hours, while

something like a Tesla or AMD, these are

down 40 basis points. Uh Nvidia is down

29. Super Micro down 1.4 in the after

hours. So, it's possible we're see and

here you could see the cues dumping uh

in after hours with Bitcoin. But, uh

look, you know, really this could be

anything. It could be uh one single

entity. It could be one hedge fund. It

could be one country. We have no idea

why they sold or what's going on. All we

know is that somebody sold. They caused

some liquidations and they're selling

for some kind of reason. Uh

unfortunately

I personally am of the belief that a lot

of people should probably be de-risking

more most and I'm not short the market

uh uh you know obviously I have some

hedge positions but I'm not broadly

short I'm broadly long uh just I've

allocated myself to like bonds and bond

related companies we talk about this in

the course member live all the time but

anyway um I think what's most important

here to consider is uh please Please,

please think about your personal

portfolios and think about uh what I

like to call plunge protection. I think

in this sort of environment uh the stock

market and crypto market whatever

everything can move very very rapidly.

So drisking I don't think is a bad idea

especially since everybody in their mom

kind of thinks oh you know when the Fed

cuts everything's going to moon.

A, that's not always true because if the

Fed cuts because you're going into a

recession, things actually plummet. And

B, if markets are already fully pricing

in a soft landing, then you really only

have one direction left to go. So, just

be cautious, take it easy out there, and

um, watch your portfolios. Thank you so

much for watching. Consider subscribing

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Congratulations, man. You have done so

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you.

Kevin Pra there, financial analyst, and

YouTuber. Meet Kevin. Always great to

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