3 Possible Reasons Behind Bitcoin’s Drop to 3-Month Lows: Analysis
On the nervous global backdrop, the much anticipated “Merge” eventually transpired as a sell-the-news type of event. Cryptocurrencies suffered fresh declines in the wee hours of Monday morning.
The global market cap fell to $909 billion, with a trading volume of $79.54 billion over the past 24 hours. Major assets such as Bitcoin and Ethereum slid below $19k and $1.3k, respectively, recording double-digit losses in the past day alone.
With the palpable nervousness across global markets ahead of a key rate decision by the Fed due this week, the turbulence in the market is likely to continue. Investors would need to brace themselves to alleviate the damage.
Investors Need to Brace For More Declines
According to CryptoQuant’s data, two recent signs of indicators have occurred that suggest a strong fall signal. A movement of more than 5,000 BTC by the long-term Bitcoin holder, which has continued to HODL in its seventh year, could mean a further downward trend in the near term. The South Korea-based analytic platform stated,
“The fact that the long-term holder moved the BTC means that there will be an unusual price movement in the future.”
Ethereum’s dominance may further exacerbate Bitcoin’s downward pressure, which has been spiking lately. But it’s worth noting that the real increase in the altcoin could come after a strong rise in Bitcoin.
When the latter is “simply transverse,” the excessive jump of Ethereum creates a bubble. As such, the growing Ethereum’s dominance by more than 20%, in particular, could provide a “good timing to enter the short position.”
Bitcoin Whale Activity
In recent months, whale activities surged just before Bitcoin’s break below the psychological level of $20k. In fact, more and more previously dormant coins are being revived. August alone witnessed the reawakening of dormant Bitcoins, which could signal long-term holders joining the selling side and start offloading their positions to avoid further losses. Typically, such a move is deemed the first sign of capitulation among investors.
Old wallets have been engaged in moving thousands of BTC in a short period, thereby triggering enormous pressure on the market. Having said that, these transfers could also be part of a fund redistribution.
Miners, on the other hand, are adding to the bearish atmosphere. August recorded the fourth consecutive month to have seen negative miner net flows. Reports suggested that the net outflow last month stood at 21.3k BTC.
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