Warnings of an imminent Bitcoin flash crash are growing

We said it earlier this week, Bitcoin must maintain a level between $60,000 and $65,000. So far that seems to be happening.

However, now that the entire crypto market has been struggling for a week and internet searches for the term ‘bubble’ are increasing (also due to the new record price for Nvidia shares), some analysts are predicting a flash crash for Bitcoin during the summer. Why do they think so? There are three reasons for this

AI bubble

The Wall Street Journal, the Financial Times and MarketWatch talked about a possible AI bubble earlier this week, especially now that the price of an Nvidia share rose by almost 40% in one month. Such an increase is normal for crypto coins during a bull market, but not for large tech stocks.

If Nvidia indeed were to crash (or simply sell off) this summer, investors would likely embark on a sell-off of riskier assets, which includes Bitcoin.

Halving

Secondly, there is the fact that Bitcoin mining companies are increasingly selling their Bitcoins to cover their increased costs ever since the April halving.

Remember that they now only receive 3.125 Bitcoin per block instead of 6.25 Bitcoin per block before.

“The recent bitcoin price drop was also influenced by high selling volumes from miners,” Matteo Greco, research analyst at crypto and financial technology investor Fineqia, explains.

Elections and holidays

Third, with the French parliamentary and US presidential elections coming up, it is currently uncertain who will govern both major economies, causing many investors to reshuffle their portfolios. Reduce risky investments and increase defensive investments is the standard setting in times of geopolitical uncertainty.

And finally, the summer sun is back in Europe and the United States, which means that there are fewer investors sitting behind computer screens anyway.

The risk of a Bitcoin flash crash certainly exists this summer. Let’s hope it doesn’t materialize though.