So, as everyone knows, last couple of Fridays have been brutal for the market, the exchange rate (BTC/USD) dropping from a cliff in short period of times.
I have seen some commentaries saying some variations of
- It is a leverage flush-out
- It is a healthy for the market in the long run
- It eliminates weak hands
As someone who understands Bitcoin itself (the protocol, hashing, elliptic curve etc.) reasonably well, I cannot entirely appreciate what do these mean, let alone whether these are even true. Probably it is because of my lack of trading knowledge, which I guess is different from understanding the Blockchain?
Any laymen friendly explanation of what exactly is the leverage flush-out that happened and why is it healthy? I mean any flush-out that happened, it is not like those traders died (sincerely hope so) or will never trade again. So they will be back with their leverage again, right? So in what sense will this have any healthy long run impact?