Flash crash rattles gold markets as Bitcoin holds strong

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There have been a few major market collapses in cryptocurrency markets as of late, and the latest such incident occurred on Thursday, May 10, when the Dow Jones Gold index fell nearly 300 points, or 3.5 percent. As it happens, the next day Bitcoin briefly fell by more than $100, the second-largest drop in the cryptocurrency’s history. Bitcoin has now done this four times in the past few months, including on May 5, when the cryptocurrency dropped by more than $1,000, or 13 percent, in a matter of hours.

A flash crash has rattled the world’s gold markets, with the price of gold falling to its lowest level in a year.

The cryptocurrency market has been under pressure since the start of October, with Bitcoin and other major assets being hit hard by a violent flash crash.

Gold prices have plummeted during Monday’s Asian trading session, extending losses from the previous week.

A sudden collapse on August 9 pushed gold prices below $1,700/oz, bringing it to its lowest level since March.

During Asian trading hours on Monday, the price of the precious yellow metal fell to $1,690/oz, according to Tradingview. Gold has subsequently recovered somewhat, with the price last changing hands for $1,742/oz at the time of writing.

Since trading over $1,900/oz at the end of May, gold has dropped 4% in the last seven weeks and 8.7% since that time. So far in 2021, the precious metal has lost 8%, and it is now down 14.6 percent from its all-time high of just under $2,040 in August 2020.

How did I fall asleep during this Gold flash crash pic.twitter.com/2Foy7WiOwB

August 9, 2021 — Chairman Everything-Will-PumpTM (@chairmanlmao33)

Forex trader and chart guru, Peter Brandt, attributed the crash to wholesale liquidations, stating: “This has all the finger prints of a bank/brokerage house conducting forced liquidation upon a huge leverage speculator.”

He pointed out that the leverage ratio on the gold markets of the Chicago Mercantile Exchange is approximately 15 to 1, implying that highly leveraged traders are driving gold price movement.

The collapse this morning was also attributed to “stop-loss linked selling in extremely thin market circumstances,” according to analysts at London trading company City Index.

However, last week’s drop in commodities prices was also triggered by U.S. unemployment statistics. According to a Bureau of Labor Statistics report released Friday, the jobless rate fell higher than anticipated to 5.4 percent from 5.9 percent, a record low for the epidemic period. With the job market and the wider U.S. economy continuing to improve, City Index came to the following conclusion:

“Better employment statistics pushed the US currency and bond rates up, which is never a good thing for commodities.”

Bitcoin is now worth 25 ounces of gold, down 28.5 percent from its all-time high versus gold, when a single BTC was worth 35 ounces at Bitcoin’s all-time high price of over $65,000 in mid-April. At the start of 2021, one Bitcoin was worth 15.5 ounces of gold.

Flash crash rattles gold markets as Bitcoin holds strongHighcharts.com has the price of bitcoin in gold ounces.

According to CoinGecko, BTC has dropped 2% in the previous 24 hours to $43,667 at the time of writing.

The big news from the gold markets this morning is the result of a massive flash crash. It appears that the price of gold has dropped, along with other markets, due to a sudden plunge in the value of Bitcoin earlier today. Although it’s not clear what caused the drop in the price of Bitcoin, the gold markets and other commodities are all taking a hit.. Read more about bitcoin flash crash 2011 and let us know what you think.

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Emilia James
By Emilia James

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