A catastrophic technology glitch combined with mass Wall Street selling has caused the current downturn in cryptocurrency markets.

Here is a brief summary of the events which contributed to the current downtrend.

1. The Cause: A Catastrophic Technical Glitch Caused by an Algorithmic Bug Which Caused Widespread Account Liquidations.

As reported by crypto expert Tom Lee, the initial reason for the crash began on approximately October 10th.

Flash Crash:

The flash crash occurred when the U.S. dollar-pegged stablecoin, USDE issued by Athena, dropped from its $1.00 peg to $0.65.

Algorithmic Panic:

Stable coins serve as collateral for automatic deleveraging (ADL) algorithms which were immediately activated upon the plunge of USDE.

Wipeout:

In seconds, nearly 2 million crypto accounts were liquidated.

Result:

This extreme depletion of funds crippled market makers (providers of liquidity) who subsequently pulled back from providing liquidity to prevent further account liquidations. As a result, the market had zero liquidity and collapsed into free fall.

2. The Accelerant: The Wall Street Exodus

At the same time the technological malfunction severely compromised the market structure, Wall Street chose to accelerate the downward trend in their own risk-off appetite.

ETF Dumping:

BlackRock alone dumped 10,000 Bitcoins through their respective ETFs in one week.

Corporate Selling:

Unlike the long term holders such as MicroStrategy, most Treasury Companies are selling now to reduce the overall level of risk associated with their holdings.

New Investor Panic:

Investors that entered the market using ETFs and are therefore experiencing the volatility of Bitcoin for the first time are also selling their positions in panic.

3. The Charts: All Support Lines Have Been Broken

Low liquidity combined with extremely heavy selling activity completely destroyed all prior technical support lines.

Below the 50 Week Moving Average:

Bitcoin plummeted below the 50-week moving average that served as the safety net for more than two years. Due to the fact that the drop occurred after several months of stagnation as opposed to a price surge, it indicates a far greater structural weakness.

4. The Silver Lining: A "Black Friday" Sale?

Although there is much fear at present, history tells us that this is a buying opportunity.

Extreme Levels of Overselling:

Indicators demonstrate that Bitcoin is as oversold today as it was during the collapse of FTX at its lowest point. These historically represent solid buy signals.

Quiet Buying By Smart Money:

Retail investors are panicked, while large players such as Tether continue to quietly purchase billions in the current "dip."

Long Term Outlook:

When corporate selling eventually ceases, the foundation of the fundamentals supporting Bitcoin's rise to the half million dollar mark within the next cycle remain intact.

Summary

The current state of affairs can be thought of as a ship being battered by a severe storm (massive Wall Street selling) while having sustained damage to its hull (a technical glitch wiped out liquidity) . The ship will ultimately continue to operate, however it requires some time to repair itself. From an investor perspective, the plan continues to be the same: disregard the noise and ride out the volatility.