- BTC dropped to $10,005 and closed at $10,172 in a major pullback that rattled the entire crypto market
- It was preceded by the failure to sustain a breakout above $12,000 in the last 30 days
- Bitcoin miners are also heavily selling the benchmark cryptocurrency
Bitcoin collapsed to $10,005 Thursday before settling at $10,172, a major pullback that wiped out the gains from the past 35 days. Analysts pointed to the strengthening dollar and a strong miner-side selling pressure as key reasons for the drop.
Bitcoin’s recent drop was preceded by the failure to sustain a breakout above $12,000 in the last 30 days. Although acknowledged as a major resistance, outside forces, particularly the strengthening of the U.S. dollar have caused Bitcoin and the traditional stock markets to retreat. News outlet Coindesk noted that the S&P 500 slid Thursday after hitting a new record high this week.
According to John Todaro, director of institutional research at TradeBlock, there is an overlap between equity and digital currency sellers. He emphasized that majority of the stock market decliners are tech stocks, including Tesla, Netflix, Facebook, Amazon, Alphabet (Google), and Apple.
“It is unclear if this will push into a continued broader crash in equity markets, which could put more pressure on digital currencies, or if it is just a short-term correction,” Todaro added.
Reports from Cryptocurrency intelligence firms also noted what they observed as an unusual increase of miners selling their Bitcoins. Miners are perpetual sellers because they always need to sell to cover the cost for mining Bitcoins. Research firm Cryptoquant highlighted new data that suggested miners were preparing to sell their Bitcoins, which would naturally add to the selling pressure.
Continuous selling from the miners would negatively impact the price of Bitcoin. However, Cryptoquant also told Coindesk that the selling witnessed recently does not mean that the miners are capitulating. Cryptoquant founder Ki Young Ju noted that there is an ongoing war between miners and mining firms at the moment.
Some of them wanted to push the price below to effectively force the rival miners to capitulate. While the other side might want to push the price higher to render the rival mining firms’ outdated machines useless, forcing them to capitulate as well.
“Some Chinese miners already realize their mining profitability (ROI), and they might not want new mining competitors joining the industry because of the bull market,” Young Ju emphasized to Coindesk.
As to where Bitcoin is headed next, analysts are expecting a rebound to $11,200. If that level is reclaimed, then it is a sign of bullish continuation.