The price of Bitcoin has fallen from $ 15,800 to $ 14,800 in recent days with a relatively wide correction. The main question is what caused the fall?
To Report The Bitcoin Telegraph fell 6 percent to $ 14,800 just five hours after reaching its daily high of $ 15,840. This sudden increase in price fluctuations may be influenced by three main factors.
Rising dollar in global markets, falling gold prices Following Pfizer’s announcement that the results of the corona vaccine were successful and the withdrawal of market whales are the three factors that contributed to the decline in bitcoin prices yesterday.
Simultaneous fall in the value of precious metals and bitcoins
According to the Associated Press, Pfizer, the global pharmaceutical giant, has announced that the third phase of testing of the Corona vaccine has been successful and has been shown to be 90% effective in preventing Covid 19.
Pfizer has so far tested its vaccine on 44,000 volunteers. If the vaccine proves effective in preventing coronavirus, Pfizer ‘s next step is to introduce the vaccine to the US Food and Drug Administration. The Food and Drug Administration will also conduct tests to validate the vaccine and to authorize its widespread production and distribution.
The Dow Jones industrial average rose about 1,000 points after the results of the Corona vaccine were announced to be successful. This eventually led to an increase in trading volume in the US stock market. Gold and bitcoin fell simultaneously as the dollar and the US stock market rose.
Michaël van de Poppe, a full-time trader in the Amsterdam Stock Exchange, notes the growth of the US dollar index, noting that other financial markets such as gold and bitcoin are valued against the dollar. . Thus, as the value of the dollar rises, so do the prices of bitcoins and precious metals.
Michael Van Dupope said:
With the growth of the dollar index, the value of assets such as gold, silver and bitcoin seems to have dropped significantly. Bitcoin price correction after this fall seems like a great opportunity.
Whales start selling hard
According to data from the analytics website CryptoQuant, the 6% drop in the price of bitcoin occurred while market whales were selling a significant portion of their assets.
A digital currency market trader named Byzantine General has found a similar pattern. Due to the fall in the price of Bitcoin following the retreat of market whales, small traders are using this opportunity to place their purchase orders.
The whales sold their assets for $ 15,800 for three reasons; The price has mostly resisted below the $ 16,000 level. Technical analysis shows that if the $ 16,000 resistance is broken, Bitcoin will reach its highest price in history.
The market usually reacts strongly when whales sell their assets. It is not yet clear whether the whales will return to the market in order to make more profit and resume the uptrend. The whale retreat has now stopped and the price is correcting above the $ 15,100 level, which indicates a change in the short-term uptrend in the bitcoin market.
Long-term investors stand strong
“Despite the sharp fluctuations in bitcoin prices, it is unlikely that long-term investors will leave the market,” said Cantering Clark, a digital currency market trader.
The return of a significant amount of whale assets to the market has caused bitcoin to fall more than gold. But traders who have invested in the market with a long-term view do not change their position.
In addition to what has been mentioned so far, Glassnode analysts point out that the Bitcoin Holding Index is a reminder of the previous uptrend in the market. Accordingly, if Bitcoin fully offsets yesterday’s price drop, the likelihood of a resumption of the uptrend will increase:
The short-term holder of the MVRV bitcoin has maintained its positive ratio for the past six months and has returned to the positive zone after approaching the neutral line. Looking back, it can be seen that maintaining a constant level of support indicates the continuation of the upward trend in the bitcoin market.