Bitcoin (BTC) Crash: Huge Short Position Bringing It Down? Here’s What Is Happening

The crypto market has shed a massive $36 billion of its value in the last 48 hours after a mysterious 10,000 BTC short position was placed on the futures market. Coincidence?

The price of Bitcoin (BTC) took a second blow within a day after Wall Street investment banking giant Goldman Sachs announced on Thursday morning it was withdrawing plans to open a crypto trading desk. The news comes a day after the price suffered an attack from strong bearish opposition, with the asset’s intraday value falling by $400.

Up until 08:00 UTC on Wednesday, BTC had shown consistent bullish progress over three weeks, with hopes that a climb to $7,500 would see the asset finally break out of its long-standing resistance. However, these were short-lived dreams as the number one cryptocurrency took a sudden plunge of 4% in a single candle. From there on, red candles have continued to cascade and drag Bitcoin down by $1,000 overall.

The wider community has voiced suspicions of insider trading following a huge 10,000 BTC short position placed on September 2, just before the recent market downturn. At that time, the BTC market was looking quite bullish, and even the futures market was showing a rapid decline in short positions as derivative traders remained positive over Bitcoin’s short-term prospects.

So who could have placed that short order?

A number of theories are already circulating in the crypto space, a popular belief being that Goldman Sachs itself could have been shorting the market in the knowledge that its news this morning would likely crash Bitcoin’s price.

It could also have been whales trading on the insider knowledge that Goldman Sachs was going to shelve its plans for a crypto trading desk later in the week.

These are both feasible scenarios, especially since both suspects could afford to open the huge $74 million position if they so desired. However, it is worth remembering that correlation does not always equal causation.

What is also worth remembering is that cashing out of a short position requires of the culprits to first buy back the amount they originally sold. This will usually be done after the wider community of investors have panic-sold their BTC and helped push the price lower.

With this in mind, we should expect Bitcoin’s price to recover nicely once the fear-driven selling subsides and the mysterious short seller buys back in.