No, the significant drop in Bitcoin value causing losses in the billions is not attributed to Elon Musk’s SpaceX.

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Late on Thursday, Bitcoin encountered an abrupt price decline following reports of massive sell-offs in the hundreds of millions. This triggered a widespread downturn across both futures and spot markets, creating a tumultuous situation.

“Just woke up. Who sold?

This is what Reetika, a bitcoin and crypto trader in Dubai, thought first when she checked prices after waking up, just like she usually does.

A big surprise happened in the crypto markets. It was unexpected and made everyone pay attention after things had been a bit boring for a while. Reetika and other traders all around the world were probably just as surprised as her. The losses were sudden and a lot, which was a shock to people who believe in cryptocurrencies.

On Thursday, Bitcoin’s value dropped a lot. Traders were selling their bitcoins because of a few different reasons that didn’t really have anything to do with each other. Because of this, the total value of all cryptocurrencies together went down by 6.7%. This was one of the largest decreases in a while.

Around 06:00 AM on Friday, the price of bitcoin had gone down a lot in the last day, about 9%. It went from $28,500 to $25,000 on Binance. This made the whole market go down, and even major tokens like Litecoin fell by 14%. Because of this, more than $1 billion worth of cryptocurrency deals got canceled, which is the highest in 14 months.

Some people talked about SpaceX, a company that explores space, selling its bitcoins. But this wasn’t proved true. Others thought maybe the bankruptcy of a company called China Evergrande caused the drop. But it’s likely that neither of these things actually caused the problem.

A report from a newspaper called the Wall Street Journal came out on Thursday evening. It talked about Elon Musk’s company, SpaceX. The report said that in the years 2021 and 2022, SpaceX had lowered the value of the bitcoins it owned and even sold some of them. But this report was published before the sudden fall in prices. There’s no proof that the company sold more bitcoins on Thursday.

Big traders are saying that the way the market was set up and the large number of liquidations probably caused the sudden price drop. It’s not just one main reason. The market was also not very active and not changing much, which made it more likely for big changes to happen suddenly.

“We’ve noticed that many people are making bets to make money if Bitcoin’s price goes down,” said Lewis Harland, a trader from Decentral Park Capital, in a message to Cryptomacburger. “When the price dropped below $28,500, a lot of people who were hoping for the price to go up had to sell their Bitcoin quickly. This happened along with regular Bitcoin selling before a certain date, probably because they thought the date might get postponed again.”

Open interest is about how many future contracts haven’t been completed yet for any money thing. When a lot of these future contracts are made, the prices can drop fast if a big player sells a lot.

This is because when prices go down, people who thought prices would go up have to sell so they don’t lose more money. This makes more people sell, and the prices keep dropping because people are selling and trying to avoid losing money.

Data shows most of these people who had to sell quickly were using the OKX crypto exchange, which was about 40% of the whole market.

Some other reasons for the drop are that interest rates in the U.S. are getting higher, as others have talked about before. Harland also said that if these higher interest rates continue, the prices of things that are risky to invest in might keep going down.

Other experts at CryptoQuant, which looks at how people use cryptocurrencies, told CoinDesk that they think people will still feel negative about the situation for the next few days. This is because more short traders, who try to make money when prices go down, are making bigger bets, which could mean they expect prices to stay low.

Funding rates are like payments that traders make depending on whether they think the prices will go up or down. If they’re in a certain type of trade, they’ll either get money or have to pay. These payments help make sure that there are always people trading on both sides.

When the rates are high, things can get more uncertain because traders want to be on one side of the trade. This can make both the prices for the future and the current prices go up and down a lot.

Right now, traders are waiting to hear about a decision from a court regarding something called a Grayscale exchange-traded fund (ETF). This decision is expected to come out on Friday.

A special court will say if it’s okay for Grayscale to make this ETF that’s linked to Bitcoin. Grayscale and the U.S. Securities and Exchange Commission (SEC) have been arguing about this. If the court agrees with Grayscale, it might make the prices go up a lot. But if they don’t agree, it might make the prices go down even more.


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