Bitcoin made a quick recovery after a momentary dip causing panic among investors. Despite the brief turmoil, the cryptocurrency has bounced back up by 5% showing its resilient nature. Read on to learn more about what caused the dip and how Bitcoin managed to recover quickly.
Bitcoin Plummets as Fake News Causes Panic Selling
Bitcoin prices fell by 8% on April 26, in a fall to around $27,200. More than $200 million was liquidated in less than an hour, and around 90% of the liquidations were long positions, according to CryptoPotato. The crypto market also took a beating, with around $70 billion exiting as total capitalization fell to $1.20 trillion.
However, the asset rapidly recovered during the Asian trading session on April 27, regaining 5% since its intraday low to trade at around $29,000 at the time of writing.
Fake News Panic Selling
The panic selling was caused by fake alerts from blockchain analytics firm Arkham Intelligence, which tweeted that Bitcoin wallets linked to the U.S. government and seizures from the Mt. Gox hack had been revived. The news was spread across crypto Twitter, with high-profile accounts posting: “Mt. Gox and US Govt Wallets Making Transactions.”
However, the news turned out to be a false alarm, as Arkham and other crypto traders confirmed. Furthermore, it was pointed out that these wallets controlled by the U.S. government will eventually become active, potentially liquidating the assets.
Crypto Market Rebound
At the time of writing, the majority of crypto assets were rebounding. More than $50 billion had returned to the markets, pushing the total cap back to $1.25 trillion. However, markets remain range-bound since their fall from 2023 highs of $1.34 trillion on April 16.
Today’s dump and pump was just a blip, but it clearly shows the impact fake news or alerts on social media can have on crypto markets.
As the crypto market becomes more mainstream, it will face more scrutiny from regulators and greater volatility from misinformation. However, investors should be diligent in their research and remain level-headed amid market fluctuations. It is also important to use trustworthy sources and avoid falling for fake alerts or news.