In the past day, the crypto market went down by $13 billion. Most digital assets ended up in the red. This includes Bitcoin price. While many say a huge growth is inevitable, this does not seem to happen. Why is that?
Bitcoin price correction left Bitcoin trading at around $8,500. The entire community is now wondering what needs to happen in order to go over the $9,200 resistance level. Some analysts pinpointed that there are some clear things that are impacting Bitcoin price. They are mentioned below and could actually lead towards a short-term crash.
Dumping From The Plus Token Scam
Bitcoinist reported that over 12,000 BTC were starting to move from the PlusToken scam, going into unknown addresses. The total value of what was dumped was $107 million. Splitting this makes it easier to make the funds lost and fraudulent Bitcoin being moved is a sign that a massive sell-order will appear.
In the event that the dumping does not happen, things will stabilize. However, the simple moving of this amount can make traders exit the market to look for assets with a higher stability.
The Effects Of The Coronavirus
Some analysts said that the appearance of the coronavirus will increase bitcoin price but the reality is there are now valid concerns that the Bitcoin drop is correlated with the spread of the virus. It is possible that coronavirus affected BTC in different ways nobody predicted. For instance, it might be due to it affecting mining businesses.
There is evidence that mining closure is connected with the Bitcoin demand drop that is happening. However, we are not certain about how closures affect Bitcoin interest. The mining difficulty for Bitcoin is altered ever 14 days in order to adjust to computing power available. This means closures should have limited processing speed effect.
In an ideal scenario, coronavirus-related closings of Chinese mining facilities end up being offset by the protocol. However, it is possible that people start to dump BTC to get access to fiat currencies as they get ready for a wide possible outbreak.
Before the May halving event, BTC owners are likely going to hold onto the assets they have. This is a certainty if they believe demand will increase and supply will decrease. The same thing happens with miners as they control a large part of Bitcoin supply.
Optimism associated with Bitcoin halving can explain trade volume drops, according to analysts. This is oftentimes a precursor for financial pullbacks. When trade volume lack persists, recovery is much more unlikely.
The good news is that miners hoard often. Whenever this is the main reason why a pull-back happens, the community does not need to worry. It just shows a bearish trading behavior that relies on people thinking that BTC will increase in the future. The pull-back tends to be temporary.