Why the Crypto Market Crashed— Alameda Research Trader

Speculations continue to rise as the entire cryptocurrency market plunges deeper into a fast-paced decline in value.

A crypto trader at Alameda Research, Sam Trabucco, has given his views on reasons why the cryptocurrency market has plummeted this low. Trabucco stated several reasons on Wednesday for the price retrace that affected major cryptocurrencies like Bitcoin and other altcoins. 

On May 19th, BTC traded for as low as $30,000 for a very short while, the value was about half its price after recording an all-time high in February. Ethereum as well hit a $1,850 low as the market hit a bottom trend.

Major opinions that are top on the minds of cryptocurrency investors have touched on several factors, some of the traders think that the crypto market happened to be over-leveraged. 

Other heavy speculations have touched on the various reasons including the controversial Tesla announcement, the new Chinese policy on virtual currencies and the US increased interest rates, and more regulatory policies. 

Alameda’s Trabucco Analysis 

Trabucco analyzed the market decline on Twitter where he summarised the crash to several factors.

He tweeted, “The narrative in the winter was clear: institutions were getting into crypto and that’s why crypto rallied so much. This mostly happened in BTC, but the other coins mostly had a beta to BTC so they all rallied some, too.” 

He also hinted that the many institutional entries into Bitcoin are gradually shifting to ETH, also pointing to the hysterical trigger pushed by Tesla CEO Elon Musk. 

Trabucco also mentioned that the funding BTC rates for perpetual contracts were  “consistently between low + and quite high + as new contracts got opened.”

He also revealed in his analysis that the recent high trading price of Ethereum was driven up by tradings that were staking on leverage despite that people think the price was sent up by institutions buying into the crypto on Coinbase. 

All these leveraged purchases of $BTC and $ETH made liquidations swap from small reversion to a bigger reversion, as Trabucco explained. He pointed out that despite speculations of Ethereum rallies being focused on low leverage and were spot-driven, all the volumes were in derivatives or spots where the exchange allowed them.

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