4 Reasons Why Bitcoin Dropped
We analyze 4 reasons why bitcoin dropped and may dip further.
There are indications that Bitcoin's price may further dip, and here's why.
Whales are depositing and selling bitcoin
According to one analyst, 98% of the deposit volumes comes from the top 10 deposits. This may serve to indicate that Bitcoin (BTC) whales are ready to cash out. We can therefore expect the BTC price would drop deeper.
But institutional investors seems still buying, as one analyst observed:
"BTC Reserve on Exchanges continues to drop. Yesterday around 40k Bitcoins are withdrawed from exchanges. Some big boy players are still accumulating."
Miners may be selling bitcoin
On Dec 10, Cryptoquant warned of a potential Bitcoin dump upcoming, saying:
"$BTC Miners' Position Index hit the three-year high. It seems miners are selling $BTC to the OTC market or exchanges."
Typically, miners have lots of Bitcoins and can therefore exert a great deal of influence on Bitcoin prices. When they make the move to dump the mainstream cryptocurrency, Bitcoin's price will hardly keep surging.
Mt. Gox Bitcoin dump
On Oct 15, Mt. Gox announced its plans to extend the submission deadline for the rehabilitation plan to December 15, 2020. As the rehabilitation plan deadline is December 15, 2020, this means around a refund of 150,000 BTC could be flowing into the crypto market, which could potentially lead to a bearish market.
Technical Analysis
The 30-day moving average (MA) is a strong support level since Bitcoin price started to surge in October. The correction on Nov. 25 and 26 ended when the BTC action nearly touched the 30-day MA support level and then surged to a record high.
But today, although the 30-day MA trend is still up when the BTC action touched the 30-day MA again, Bitcoin plunged. This could be a warning signal that the bearish market is forming. What traders need to look out for is whether the Bitcoin price could pull back above the 30-day MA.
Source: Binance, bitcoin chart (30-day moving average in blue)Image source: Shutterstock
