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Bitcoin (BTC) reached record highs on various exchanges on Nov. 30, reaching a high of $19,786.24. The BTC market is becoming more appealing to investors as cryptocurrency goes mainstream. Then the market may have experienced a stop-loss-run.

Kraken, the San Francisco-based cryptocurrency exchange appears to have experienced some unusual volatility on Monday.  The activity is being identified as a classic stop-loss-run.

The Kraken exchange is a pioneer, of sorts. It is the first cryptocurrency company in the U.S. to become a bank. In September,  the Wyoming Division of Banking’s general counsel approved Kraken's special purpose depository institution (SPDI) application, making it the first new charter bank in the state.

Kraken BTC stop-loss-run?

Data shows that Kraken's BTC/USD hit its highest ever price on Monday. Then it dropped unexpectedly to $16,600 within seconds. Last week, it traded to as low as $16,600.

In the classic "stop-loss run,"  large-volume traders intentionally place big sell orders at a specific price point. They are targeting where they think a large number of stop-loss positions are located.

On Monday’s gambit, the target appears to be $16,600. Then a one-minute candle was triggered to drop the market more than $3,000 below the Bitcoin spot price. 

Selling pressure was artificially created to very quickly deliver the result-getting to the target price number where stop-loss clusters are set.

What happened at Kragen seems to be a stop-loss-run crash. As a result, a large number of positions were liquidated and many of the speculators were hurt. The large volume trader can watch the process in real-time and see the rebound that made them richer.

Traders' liquidity is always at risk and it’s a good idea to be cautious surrounding price points that are significant. 

Many traders set their stop-loss positions based on recent lows to assure they don’t lose the overall investment. Be creative when you set your stop-loss price points.

Bollinger says "classic top formation" was really in-play

John Bollinger, the creator of the market volatility indicator Bollinger Bands, claimed in a tweet that what happened at Kragen was a “classic top setup.” 

OK, time to pay attention, $BTCUSD. That is a classic top setup. No confirmation yet and the setup could easily be overrun, but wise traders should wash their glasses.https://t.co/RKgTJje5IU

— John Bollinger (@bbands) November 30, 2020

Basically, Bollinger believes that investors choose to exit at near $20,000, in order to avoid the costs of any sudden reversal of BTC value. When the price wavered up around that mark the top dropped down at the resistance.