mido-finance.com

The price of Bitcoin dropped to sub-$10,000 in lots of exchanges again on Sep. 5. Other major cryptocurrencies, including Ethereum’s Ether (ETH), fell by about 10%. Three reasons that dropped the price of BTC can be the abrupt drop of Bitcoin include miners, a strong dollar and whales taking profits.

whales taking profits

When the price of BTC suddenly dropped by 5% to $9,975 on Binance, BitMEX liquidations were below $40 million. Generally, when a significant price movement occurs, it causes over $100 million worth of futures contracts to get wiped out.

The futures data predicts that the selling pressure came from the spot market. There is a low probability that retail investors began to dump aggressively at above $10,500.

Whales taking profit at $10,500, which has historically served as a multi-year resistance level for Bitcoin, is more possible.

But whales have been taking profit since Bitcoin achieved $12,000. As it was previously reported, a whale sold at $12,000 after “HODLing” BTC for over two years.

Miners potentially selling

During the week, on-chain data provider CryptoQuant said that mining pools had been taking profits. Ki Young-Ju, the firm’s CEO, noted:

“Miners send a certain amount of BTC to exchanges periodically, so they already have a large amount of BTC in the exchange. Whenever they decided to sell, it seems they move a relatively significant amount of BTCs to other wallets, and some of them are going to exchanges.”

The gradual sell-off of BTC by miners since mid-August could have built significant selling pressure on Bitcoin. However, Poolin vice president Alejandro De La Torre emphasized that it is challenging to accurately track miner outflows. He said:

“I can reassure you that CryptoQuant does NOT know which wallets are owned by Poolin. perhaps it’s a handful of (big) miners they are tracking… even still, many assumptions.”

Stronger dollar and ETH weakness

A common factor throughout the past two weeks, as Bitcoin dropped, was the strengthening of the U.S. dollar. The U.S. dollar began to show signs of recovery after months of downside while the euro began to slump.

Since both Bitcoin and gold are valued mostly by the U.S. dollar, and many Bitcoin traders are based in the United States, the increasing value of the dollar contributed to BTC’s weakening momentum.

Moreover, the substantial decline in the price of ETH could have amplified the downtrend. On Sep. 5, ETH dropped below $360, to as low as sub-$340. A well-known trader known as “Byzantine General” said if ETH falls below $360, $290 is the next likely target. He said:

“I’ve learned that this is an ‘ascending, right angled, broadening formation.’ Very typical after an uptrend, and a pretty neutral pattern: 55% of the times breaks out upwards. But man, 360 better hold or otherwise we go straight to 290, possibly 250.”

Ether front-ran the Bitcoin rally since early April and the weakness in ETH could have intensified the short-term drop of BTC. But Bitcoin has since recovered, stabilizing above $10,200. The trend demonstrates decent purchasing demand above $10,000, which could lead to longer consolidation.

Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said the move could be bullish for BTC, saying:

“Finally, liquidity at the lows taken. Reclaim of $10,000 would mean a S/R flip and a very probable chance we’ll look for liquidity above the range highs. That would suit a bounce towards $10,750-10,900 and majority of the markets bounce 25-40%.”