Making sense of Bitcoin‘s (BTC) September fall; what‘s next?

Following Bitcoin's catastrophic sell-off yesterday, bulls are now licking their wounds following a further 7 percent drop. The world's flagship cryptocurrency is currently testing a fundamental level to the downside, which might pave the ground for further losses.

But what exactly went wrong?

Needless to say, no one had witnessed the flash crash. It was a tremendous day for Bitcoin. El Salvador was the first country to acknowledge Satoshi's invention as legal money. While the United States, the European Union, and China are unlikely to follow suit anytime soon, it is reasonable to predict that the decision will have a significant impact on global banking.

What caused the flash crash?

Here are a few things that could have influenced the decision:

* Buy the rumour, sell the news: This is a common storyline in the bitcoin world that is fuelled by FOMO and FUD. It wouldn't be unreasonable to believe that some market participants were involved in "buying the rumour and selling the news," and cashed out in the midst of the predicted media attention.

* A series of leveraged futures liquidations: The derivatives market had a significant part in Bitcoin's downturn, which had a ripple effect on the altcoin market. In reality, there were more than $2.3 billion in liquidations on Tuesday, the highest since the mid-May crisis.

Levers, as explained by Coin Metrics, can be used to scale the possible returns of a futures contract. It effectively allows market players to bet higher amounts of capital than they currently have in their accounts. Leverage, on the other hand, has some drawbacks because it magnifies risk.

Is it something that Bitcoin investors should be concerned about?

Bitcoin experienced a significant drop yesterday, plunging from a local high above $52k to as low as $42.8k on several crypto exchanges. The magnitude of these corrections, as well as the volume of leveraged trading taking place in the futures market, is unsurprising. In retrospect, a minor adjustment resulted in a major crash. What happens next?

The Relative Strength Index (RSI) has dropped below the 50-median line after producing a bearish divergence, indicating that sellers are in charge of the Bitcoin market. The market's volume is minimal, which may stymie its growth trajectory. On top of that, September has historically been a gloomy month for the BTC.

Here's the catch. Traders can predict a rebound as long as Bitcoin is above $43,000, which is a demand zone. At the time of press, the crypto-asset was worth $46,500. If buy-side volumes get the requisite momentum over the next several trading sessions, yesterday's long wick could actually aid BTC in nurturing bullish pressure.

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