The price of Bitcoin collapsed for the third time this week. here’s why

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In the letter

  • Bitcoin crashed for the third time this week.
  • It is held at around $ 10,000.
  • Experts attribute responsibility for a raid to a crypto exchange and a dumping ground by miners.

The price of Bitcoin plunged again today, from around $ 10,600 to $ 10,245 in less than an hour, a 3% drop, by metrics site data CoinMarketCap. It sounds minor, but it’s the third major accident this week. Why?

Bitcoin peaked at $ 12,067 on Tuesday. But then he started to fall. Wednesday was the first big ka-doosh, when it went from $ 11,726 to $ 11,395 in about two hours. then kerplunk Thursday, when it went from $ 11,259 to $ 10,849 in about an hour. His last defeat, uh, krrrr-Sploosh, happened today. It has since recovered quite a bit, to $ 10,463.

So why did Bitcoin crash during one of the busiest weeks for crypto? Bitcoin works in mysterious ways, but experts have handed Decrypt some likely options.

Simon Peters, market analyst at crypto trading site eToro, suggested a “number of potential causes.”

A likely culprit, he said, is a “juvenile dump”. Said Peters: “Chain analysis platforms have reported that mining pools have recently transferred higher volumes of Bitcoin than usual to the exchanges.”

Charles Bovaird, a researcher at crypto-economics research firm Quantum Economics, confirmed, “One factor may simply be the miners selling their crypto,” he said. Decrypt.

Philip Gradwell, chief economist at Chainalysis, used the technology of the blockchain investigative company to discover that Bitcoin had spilled into exchanges at record levels this week.

“Bitcoin flows to the stock exchanges were 92,000 yesterday, the highest in 37 days, as people rushed to sell at prices close to $ 12,000 on September 1,” he tweeted.

If a lot of people throw Bitcoin into the market a lot– something that often happens when prices skyrocket since traders want to cash in for a profit – then it is likely that the price of Bitcoin will fall, often even faster than it initially rose.

Then, Peters postulated, “the raid / seizure on Bithumb”. Bithumb, South Korea’s largest cryptocurrency exchange, was raided by the police yesterday. The raid, according to Seoul newspaper is related to the sale of $ 25 million tokens for the Blockchain Exchange Alliance (BXA) token,

Another reason could be the swing in the stock market this week. The US stock market, which rebounded this summer from the COVID-19 crash, has plummeted. Over the past two days, the Nasdaq has fallen more than 7% and the Dow by 2.2%

Bitcoin is often viewed as a safe haven asset – meaning it is not correlated with the stock markets – but it collapsed with the stock markets in March, and so could be this week.

But it didn’t fall below $ 10,000, the mythical price above which the cryptosphere considers Bitcoin to be strong and stable. “I believe there is strong support around the $ 10,000 level,” Bovaird said.

“We’ve seen $ 10,000 tested twice in the last 24 hours,” said Peters, adding, “It seems to hold up for now. ”

“This may present an opportunity for the bulls who were sitting on the sidelines to get involved now.”

For the sake of the holders, let’s hope they don’t have weak hands.

Warning

The opinions and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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