Bitcoin (BTC) is entering a new week after another weekend of great volatility – but this time the way was down, not up.
As the market loses $ 7,000 – the most since the “vertical” price hikes began – Cointelegraph presents five things that could keep him moving for the next few days.
BTC dip makes Guggenheim want to sell
At the top of the list of topics among Bitcoiners will be the cryptocurrency’s sudden decline on Saturday and Sunday.
Starting at highs of nearly USD 42,000, BTC / USD saw an out-of-hours sell-off, with bears dropping the pair to current local lows of USD 32,300.
The drop has been the biggest this year and since the Coronavirus caused a cross-asset crash in March 2020, but was widely predicted by analysts who claimed Bitcoin had become overloaded.
“#Bitcoin crashes> 10%: The worst Bitcoin dip since March is reminiscent of the last half-cycle in 2016/2017. The rally was followed by a slump of more than 50% in 2017, ”financial commentator Holger Zschaepitz summarized in cautious terms on Twitter.
In fact, a 23% drop is nothing new to Bitcoin hodlers in the long run, and the lack of larger losses suggests that even above USD 30,000, buyer support remains strong.
“These and upcoming dips are the opportunities you’ve been looking for during the #FOMO feelings you had for $ 40,000. Take advantage of it, ”continues analyst Michaël van de Poppe of CoinTelegraph Markets.
At press time, Bitcoin was already on the mend, with $ 35,000 quickly following the lows. However, this was not enough for institutional Bitcoin buyer Guggenheim, where CIO Scott Minerd suddenly signaled that the fund would sell some of its BTC position.
“Bitcoin’s parabolic rise is unsustainable in the short term. Vulnerable to setbacks, ”he claimed on Monday.
“The target technical benefit of $ 35,000 has been exceeded. Time to get some money off the table. “
Others pointed to the potential bargain for high-volume buyers.
“Institutions are really shaking hands with weaknesses to acquire more #Bitcoin,” David Gokhshtein, founder of Gokhshtein Media, summarized about the current status quo.
Biden talks about printing $ 3 trillion in cash
In the United States, a potential bull sign for Bitcoin in the form of a massive $ 3 trillion stimulus program from the incoming Biden government is masked by a recent rebound in dollar strength.
A classic inverse correlation for Bitcoin, the US dollar currency index (DXY) has continued to rise for the past few days, returning to above 90 after hitting its lowest level since March 2018.
Last year, the weakening of the dollar often boosted Bitcoin, at a time when other price relationships were steadily crumbling.
“The dollar is so extremely oversold, too hated, and too short-cut that at some point it all has to rise for a while,” said Matt Maley, chief market strategist at Miller Tabak + Co. told Bloomberg.
“The dollar is getting very ripe for a tradable bounce – one that will last at least a few weeks and maybe even a few months.”
But looking at the long term, it was clear to many this week that the US was simply pedaling its real economic hardship further down the road. President-elect Joe Biden plans to give Americans checks worth $ 2,000 as part of a massive money-printing exercise that could be worth $ 3 trillion.
Should it pass, in the blink of an eye, central bank liquidity will increase the most since the start of the coronavirus pandemic, and US federal debt will exceed $ 30 trillion for the first time in history.
“Time for Plan B”, Danny Scott, CEO of CoinCorner, the UK, responded to the plans.
Stocks grind upwards
Stock traders are starting to raise their hopes for inward gains this week, thanks to the shock of recent events in the United States, adding to the existing gains in the markets.
On Monday it was India’s turn in the spotlight, with stocks soaring to new all-time highs. Such as Cointelegraph reported, other markets are already on or close to their own records. Elsewhere in Asia and beyond, Hong Kong and South Korea posted gains, while Australia lost.
With a decline in US futures prior to the opening of Wall Street, market participants were greeted by a broadly mixed picture, with gold also struggling, but oil was on the rise.
Bitcoin’s reliance on stock market movements is again questionable, as the weekend’s volatility is nothing like the current macro environment. Ever since outperforming all the major stock exchanges except Tesla when the markets recovered from their crash in March last year, Bitcoin has increasingly taken its own path, unhindered by macros.
“I expect Bitcoin and tech stocks to double again in the next 6-9 months,” Immad Akhund, CEO of startup-focused bank Mercury, predicted during the weekend.
“It is clear that we are in an asset bubble fueled by fiscal stimulus, low interest rates and, ironically, higher disposable income during a pandemic. Probably won’t end well, but enjoy the ride on the way up! “
Akhund added, like several others, that his timeline coincided with the rollout of mass vaccination against the Coronavirus, the news of which has further increased stocks all round in recent weeks.
Miners are making serious profits
An explanation for Bitcoin’s price drop lies firmly in the Bitcoin network itself. A classic setup, miners seem to be selling their assets again at significant rates.
According to data from on-chain monitoring resource CryptoQuant, those sales have now reached their highest point since July 2019, even higher than those that followed the last block subsidy halving in May last year.
CryptoQuant used its Miner Position Index (MPI) to determine miners’ declining BTC shares, with CEO Ki Young Ju describe the current situation as a ‘short term bearish market’.
“They have been selling $ BTC since December last year, but the correction was small due to institutional purchasing power,” he added.
Cointelegraph internal analyst Joseph Young had further thoughts. For him, Bitcoin hit its all-time high of $ 42,000 at the end of a period when the market had just over-committed. A period of inventory – perhaps literally – was more than necessary.
“Today, $ 2.7 billion has been liquidated,” he said noted on Monday.
“The simple answer is that the market was overused, got greedy and kept buying the first dips below $ 39k.”
No “altseason 2.0” yet
Bitcoin’s lower levels could eventually become a gift to altcoin hodlers, who have been eagerly awaiting a reduction in the intensity of the bull run to give other tokens breathing room.
As Cointelegraph’s Van de Poppe often points out, altcoins don’t fare well during parabolic episodes in Bitcoin, with their main achievement after Bitcoin cooling.
“The #altcoin market cap still looks great,” he says noticed on Monday.
The first level of the impulse wave was reached at $ 320 billion. As long as it stays above $ 225 billion, the next run will take #altcoin capitalization to new all-time highs. “
On Monday, however, it was clear that pattern was not yet coming out, with altcoins tracking Bitcoin down and even surpassing its losses.
Of the top ten cryptocurrencies by market cap, many lost between 17% and 20% on the day, market leader Ether (ETH) nearly $ 1,000 support. Despite the downturn, many still maintained solid gains over longer time frames. In the case of the top ten, it was Cardano (ADA) in the lead overall, still 27% higher than a week ago.