Bitcoin Collapses $2K+ After False Alarm Sends Traders Panicking

After entering into an apparent rally following several days of decline and stagnation, the price of Bitcoin suddenly started dropping on the afternoon of Wednesday, April 26th. At the time of writing, the world’s largest cryptocurrency fell from close to $30,000 to just above $27,300 before slightly recovering. The move took place mostly within a single hour.

Bitcoin Falls From Nearly $30K to Just Above $27K in a Single Hour

After rising for most of Wednesday and even reaching above $30,000 at one point, Bitcoin suddenly started collapsing around 9 PM EST. The world’s largest cryptocurrency fell from about $29,700 to just above $27,300 within a single hour before reentering an upward move above $28,000. 

According to a rumor that emerged on crypto Twitter, an Arkham Alert was issued warning that the sudden price change started after US government and Mt. Gox-associated wallets started moving BTC. Neither of the moves would be entirely surprising as Mt.Gox wallets suddenly awoke earlier this week and moved Bitcoin worth millions, and the US government recently disclosed it is planning to sell assets seized from a Silk Road fraudster.

According to a filing from late March, US authorities are in the process of executing the plan to offload just over 50,000 BTC seized from an individual called James Zhong who in turn stole the cryptocurrency from Silk Road in 2012 using an exploit. The government already sold around 10,000 Bitcoin in mid-March but that move had no significant effect on the market.

About an hour after the dust settled and Bitcoin stabilized just above $28,000, Arkham published a statement on Twitter saying it indeed sent an alert but that the alert was the result of a bug. The platform also stated that the alert was only sent to “to a small subset of user’s private labels.”

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Bitcoin’s Intermittent 2023 Rally

While the sudden fall shook the community and raised many eyebrows, it is worth remembering that, despite multiple setbacks, Bitcoin has been rallying for most of 2023. Already in January, the world’s largest cryptocurrency rose from around $16,000 to nearly $24,000.

So far, BTC has been going from steady and significant rallies to slow and slight declines on an almost monthly basis but has already been given two unexpected boosts. After the crypto-friendly Silvergate Bank announced its liquidation on March 8th, many were worried the event would signal the restarting of the “crypto winter” which weighed heavily on digital assets throughout 2022.

The fears were proven mostly incorrect as Bitcoin, and many other cryptocurrencies, quickly entered into a sharp rally as investors decided to try and take refuge in digital assets. The rise took Bitcoin above $30,000 sparking a great deal of optimism about its future performance. While BTC again entered into a slight decline late last week, First Republic Bank’s disastrous Q1 report on  Monday again sent the world’s largest cryptocurrency soaring. 

Editorial note (April 26th, 2023, 5:48 PM EST): A paragraph on Arkham’s statement was added.

What caused Bitcoin’s dramatic Wednesday drop? Tell us what you think in the comments below.