Bitcoin Bears Eclipsed the Bulls! Good Time to Enter for Newbies?
Where Will the Bitcoin Blood Bath Lead To?
Bitcoin price had led a magnificent bull ride to touch the highs above $41,000 just a couple of days before. Many expected the price to touch $50,000 very soon, but then the price initiated its reverse trend.
The major exchanges experienced a heavy trading volume including buying but selling pressure was at the peak. Especially Coinbase exchange which had the largest trading volume as per analytics platform Skew.
Therefore slashing the BTC price to a large extent with a huge decline of nearly $5000 within a very short interval of time. However, some feel BTC might have undergone a slight correction phase and recovery is imminent.
However, the positive market sentiments and the strong bitcoin community may not allow the price to plunge below $30,000. And a positive bounce back is expected from now which might lead the price towards the target set at $50,000.
But what led to the drastic plunge which pulled down the market capitalization of bitcoin alone nearly $100 billion?
Did Institutional Investors Played Well or Some Other Factors Influence the Dip?
Huge Institutional Attention
Bitcoin received a huge attention from the other sectors as well like Microstrategy, Square,etc who invested millions. Microstrategy and Grayscale holdings are among the public trading companies who collectively hold nearly 2%-3% of the total supply of Bitcoin.
With a huge number of Bitcoins, the price can easily be controlled and hence many speculated that the institutions bought at the dip and liquidated in the bull market. But as per the bitcointreasurys.org, the institutions still hold their respective number of bitcoin. In fact, some companies have magnified their holdings.
Miners Constant Selling of BTC
Another aspect may be as specified by CEO of Cryptoquant, an analytics platform, Ki-Young Ju, the rate at which miners selling their BTC is again at its peak. He also specified that miners sold their bitcoins in December 2020 as well, but the constant institutions buying power led to only minute corrections. Therefore, institutions buying bitcoin appear to have halted.
One important factor that might have influenced the price is the Tether minting. As we all know, Tether(USDT) is backed by the USD, one USDT is equal to $1. Printing USD is controlled by the government but minting USDT is the sole decision of the exchanges. The exchanges may mint and issue as many as USDT which is a digital form of the USD.
Hence, the crypto market is directly or indirectly controlled by USDT as many centralized exchanges offer USDT market pair rather than USD. In recent times, the trading volume of Tether has hit highs to touch more than $165 billion.
Therefore, it is a possible scenario that the USDT has been influenced constantly in the market to skyrocket the price and later withdrawn dumping the asset. However, the dip always gives an opportunity for the traders to buy at the dip or the new traders to enter the crypto space.
Source: Read Full Article