Author: TOM MITCHELHILL, COINTELEGRAPH; Compiler: Songxue, Jinse Finance

Elon Musk's SpaceX reportedly selling its holdings of bitcoin, the bankruptcy of a Chinese real estate giant and concerns over rising interest rates are among the theories about a sharp drop in bitcoin's price. **

Around 9:35 PM UTC on August 18th, the price of Bitcoin suddenly plunged by more than 8% within 10 minutes, and the entire cryptocurrency market also plummeted, leaving many in the crypto community scratching their heads.

While there appears to be no consensus on the reasons for the sudden market drop, several cryptocurrency market analysts have shared their preliminary theories.

SpaceX Dumps Bitcoin, Sparking Interest Rate Concerns

eToro market analyst Josh Gilbert blamed the drop on an Aug. 17 Wall Street Journal article stating that SpaceX may have sold some or all of its $373 million Bitcoin holdings. **

“Whenever there is a big name in the bitcoin space, especially someone as influential as Elon Musk, it puts pressure on the price of bitcoin.”

The price of bitcoin dropped suddenly within about 2.5 hours of the news.

Another theory could be the rapid shift in sentiment due to broader market expectations for future Fed rate hikes, Gilbert said.

Gilbert explained: "If we also take into account some of the weakness we've seen in global markets over the past few weeks - especially in risk assets - and the expectation that interest rates will likely remain elevated for longer, then this is the case for a pullback. Recipe."

He added: “Bitcoin has struggled to move higher in the last month, trading between $29,000 and $30,000,** with little ‘good news’ to drive the asset higher, which only intensified the sell-off. **"

Government Bond Yield

Tina Teng, a market analyst at CMC Markets, took a different view, arguing that the recent rise in Treasury yields was the fundamental reason behind the sell-off. **

Teng explained that rising bond yields usually indicate less liquidity in the broader market. "That's probably the main reason for the decline in cryptocurrencies," she said. **

Additionally, Teng stated that **while the Evergrande crisis may have had an indirect impact on bitcoin prices, she does not believe it is one of the root causes of bitcoin’s price decline. ** "This has a bigger impact on the Chinese economy and investor sentiment," she explained.

Giant Whale Selling

While there are many other news events that could have contributed to this, anonymous derivatives trader @TheFlowHorse suggested that the sudden drop in prices could have been caused by a large sell off by a large player, leading to a derivative products are under further pressure. **

"It's not just a natural waterfall. Some big guy drops it for a goal and starts it. The spot volume is barely comparable to the normal volume."

According to data from crypto analytics platform Coinglass, more than $427 million in long Bitcoin positions have been liquidated in the past 4 hours. ** ** Over the past 24 hours, traders with long positions liquidated more than $822 million - betting that the price of crypto assets will rise. **

Over the past 24 hours, over $427 million worth of long Bitcoin positions have been liquidated. Source: Coinglass

Describing much of the explanation for the drop as "pure speculation," Horse said that since the SEC's report suggesting its approval of an ethereum futures ETF came shortly after the selloff, large funds may have dumped their bitcoin positions to " Trigger a cascading purchase of ETH."

Bitcoin has recovered slightly since the crash, gaining 1.2% in the past two hours, according to TradingView. As of the publication of this article, Bitcoin is changing hands at $26,619.

Its price appeared to be buoyed by news that the U.S. Securities and Exchange Commission could approve an ethereum futures ETF product as soon as October.