Bitcoin price first dipped a toe under the $9,000 mark, then went on to erase profit positions gained since the dramatic rally at the end of October. The slide took BTC to $8,780.84 as of 15:25 GMT on Friday, with plenty of leeways to drop as the weekend hovered with lower volumes. Here are five reasons why this happened.
Bitcoin Whales Calling Quits
Crypto exchanges saw outflows in the past days, with no new serious tranches of either BTC or Tether (USDT). The recent dump, based on order books, seems to be a capitulation and a selling pressure, to realize partial profits from the recent bitcoin price rally. Previously, whale watching bots noted a series of large-scale transactions of coins to exchanges, lying in wait for potential selling.
Order books reveal a pattern of selling pressures coming in from large-scale BTC traders. At this point, the selling momentum may see its tide turned at any moment, but for the time being, Bitcoin price seems solidly pressured at least to the $8,800 level.
On-Chain Metrics Point to Sluggish BTC Usage
Bitcoin transactions became almost languid in the past week, as price stagnated. Low activity suggests that most coins lay dormant, and there was no possibility for explosive price action. On-chain Bitcoin transactions and their value can indicate preparation for serious trading volumes. This week’s on-chain BTC metrics indicate that the benchmark crypto wasn’t in a mood to galvanize.
Bitcoin is one such cryptocurrency, which has a strong correlation between price and on-chain transactions, and the current metrics are not matching the expectations for a bull market. This, as with others, can be altered at any moment. But the buildup of slow coin movements ended in Friday’s sell-off.
Bakkt Action Picking Up
The Bakkt Bitcoin futures exchange saw a piling up of activity in the past day. Trading accelerated, with numbers approaching the 1,000 BTC record mark within 24 hours. This is still small compared to the overall crypto market volumes, but the Bakkt’s price discovery process has the potential to affect ongoing BTC sentiment.
Bitcoin Price Stepping into Dangerous Territory
Bitcoin prices moved into somewhat dangerous territory, charting a “death cross” of moving averages. This situation further returned traders to bearish attitudes.
At this point, too much-concerted effort would be needed to bring BTC out of that zone. In 2019, the effects of the “golden cross” and the “death cross” were highly visible.
Weak Hands Leaving the Market
The other factors affecting Bitcoin prices were more indirect. Mining has slowed down, causing the first fall in difficulty since the summer price rally. Chinese traders are still highly active with BTC trades, but there are also signs for looking at altcoins for higher returns.
The recent downward movement of stock indexes on the US markets may have added to some of the panic-selling. Bitcoin exchanges still see enough retail interest to have “weak hands” on the markets, selling in panic as the recent rally unraveled faster than expected. The bullish promise of Bitcoin price reaching $16,000 “soonish” may have caused an unpleasant surprise as the prices crashed so easily under $9,000.
Bitcoin price is set on a multitude of exchanges, in contrast with earlier periods when a handful of markets took the bulk of volumes. Currently, USDT still drives BTC, but through a wider distribution on a series of innovative crypto-to-crypto exchanges. Bitcoin remains highly risky and unpredictable, and the current slump is no guarantee for continued downward action.
What do you think about Friday’s BTC slump? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter: @gaborgurbacs, @glassnode, @BakktBot, @BitcoinCatz, @CryptoKong4
BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
Source: Read Full Article