Bitcoin trading has been on a slipping slope lately, with the price going down constantly. Since yesterday the price continued to drop and went below $30K as well which has been especially alarming for many traders. However, people have been trying to hold their assets still because a major factor has been the huge selling spree suddenly started by miners. This has not been the case for the last three months with the last major sale of bitcoins from miners happening in October 2020. At the current state of the market with the value already sliding down, the new Bitcoin dump was met with a lack of demand. There simply are not enough buyers currently present who can absorb the sudden inflow of Bitcoins.
The current (at the time of writing) value of Bitcoin is sitting just above $30k with the 24-hour value change sitting at negative 5.20%. Of course, this does not mean there is not enough capital to buy the new Bitcoins. The institutional investors are certainly capable of buying the new stock but there is hesitance, primarily because of the change in the United States government. Investors want to see what view the new Biden administration will have about Bitcoin and cryptocurrencies in general.
According to the data shared by CryptoQuant on the miners’ position index, the value of the index has been sitting above 2.0 which indicates a major selling spree among miners. The analysis of the situation is that they are selling their coins right now to meet their operating expenses. Blockfills’ sales and institutional Bitcoin trading director Neil Van Huis said that “For the first time in a while, it appears miners sold some fairly substantial holdings to raise cash as we expected on a rally after October.” He also said that “With a need to allocate capital to more (and newer) mining rigs, taking bitcoin off of their balance sheet for cash at three to four times higher prices 30-60 days after the wet season ended in China was about the best scenario [miners] could’ve asked for.”
With the selling trend continuing, institutional buyers have been avoiding further purchases as they wait for the reaction of the Biden administration to crypto regulations and policies. One particular incident that is being seen as a major factor in the price drop is the comment from former Chairperson of the Fed Janet Yellen. She said that there is a “particular concern” about cryptocurrencies being used by terrorists to finance their operations.
Currently, there is a mixed response to the price movement of Bitcoin. Some traders are concerned about the current trend while others are not yet ready to call it a completely bearish market. People like Bendik Norheim Schei from Arcane Research remarked on the loss of faith by some traders, saying that “That is probably something they will regret later this year. Bitcoin is volatile, that’s part of the game with a new and emerging asset.”
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