[ad_1]
The price of Bitcoin (BTC) shot up to $ 15,840 before crashing to $ 14,800. Just five hours after hitting an intraday high, the dominant cryptocurrency fell more than 6%. This massive spike in volatility was likely caused by three main factors.
The three catalysts for the sharp downward trend were the recovery of the dollar, the drop in the price of gold when Pfizer announced that its COVID-19 vaccine studies are producing positive results, and the whales dumped BTC.
Precious metals and Bitcoins fell hand in hand
According to the Associated Press, Pfizer has announced that the third phase of its vaccine testing is going well. The pharmaceutical giant said its vaccine is currently shown to be 90% effective in preventing COVID-19.
To date, Pfizer has tested the vaccine on 44,000 participants, and if it proves effective, the next step would be for the U.S. Food and Drug Administration to conduct its own tests before approving the vaccine for mass production and distribution.
Following the announcement of the vaccine, the Dow Jones Industrial Average rose 1,000 points, leading to a strong rally in the US stock market. While the US dollar and stocks triumphed, Bitcoin and gold fell simultaneously.
Michaël van de Poppe, a full-time trader at the Amsterdam Stock Exchange, spotted the recovery in the US dollar index and suggested that alternative value stores, such as gold and Bitcoin, are priced against the dollar. . Therefore, when the dollar recovers, the price of BTC could drop dramatically along with the precious metals.
Van de Poppe explained:
“We seem to go. $ DXY rebounds because there are more certainties at this point, through which assets like #bitcoin, gold and silver drop substantially. A $ BTC correction would be great and a great opportunity overall. “
The whales started aggressively selling BTC
When the drop occurred, CryptoQuant, an on-chain market analysis company, found that the whales were selling Bitcoin.
Traders, such as the pseudonym “Byzantine General” investor, have found a similar pattern. As Bitcoin fell into a whale-induced withdrawal, retail investors continually craved BTC.
The whales had several compelling reasons to sell BTC for $ 15,800. First, it is a major resistance area just below a fundamental level at $ 16,000. If the $ 16,000 level breaks out, technical analysts said BTC would likely position itself for an all-time high.
When whales sell, the market often sees a strong reaction. It is unclear if the whales will start profiting from their shorts and attempt to resume the bullish trend. For now, the pullback has stopped, with BTC recovering more than $ 15,100, indicating a short-term trend reversal to the upside.
Long-term players are holding on
Despite the high level of market volatility, cryptocurrency trader Cantering Clark stressed that long-term investors are unlikely to be upset. He She said:
“This volatility is just fast money playing $ BTC as a higher beta $ GOLD that downloads on vaccine news. Players who come in on behalf of the long-term thesis for Bitcoin are not changing their ranking.”
In addition to the factors mentioned above, Glassnode analysts noted that the current short-term holder activity is reminiscent of previous bullish trends. Therefore, if BTC strongly recovers from the recent decline, the chances of a continuation of the rally could increase. Glassnode She said:
“#Bitcoin Short-Term Holder MVRV has maintained its positive ratio for the past six months – and has bounced off the neutral line yet again. Historically, maintaining this support level is indicative of an ongoing bull market in $ BTC. “
[ad_2]Source link
