Earlier this week, the bitcoin price surged back above $9,000 after having a roller coaster ride last month. In February, Bitcoin climbed to $10,600 and then dropped as low as $8,420 at the end of the month.
Now, we are almost back to where we started the week. In the past 24 hours, the digital asset fell nearly 10% to $8,169.
Three potential reasons for this bearish momentum involves coronavirus, miners hoarding, and PlusToken scam dumping on the market again, said analyst Jacob Canfield.
The deadly covid-19 continues to spread all over the world while the situation continues to get better in Wuhan, China, the epicenter of the coronavirus.
As we have been seeing since last week, the coronavirus led to a sell-off in the global stock markets. The US stock market has been experiencing the worst days since the 2008 recession. This led to the central banks around the world to announce stimulus but even that hasn't been able to keep the market sentiment positive for long.
Meanwhile, the traditional safe-haven assets like gold and Treasuries have been seeing much demand and prices rising to yearly highs.
When it comes to bitcoin, last week we saw BTC reacting to the coronavirus just like the global market but this week, it took a turn. The price of a digital asset also has an inverse correlation with coronavirus.
Our @santimentfeed Emerging Trends platform continues to show that daily searches for #corona or #coronavirus are having a very telling inverse correlation with #Bitcoin's price. This green line may not show the actual global impact of the corona virus, but it does gauge how pic.twitter.com/ZfOgsXMeYq
— Santiment (@santimentfeed) March 6, 2020
According to crypto data provider, Santiments, the fear among the investors regarding the economic impact of the virus has been also playing into the crypto market but it has tapered off slightly since discussion in crypto boards peaked on Feb. 25th.
Another potential bearish narrative adding to the selling pressure of bitcoin price is the Miner hoarding which Canfield says has “typically strong bearish indication.” Asset fund manager Charlie Morris said,
“Miners have recently started to sell less than they mine. Historically, that has coincided with negative returns and reflects a weaker market bid. Miners are hoarding because they want to protect the market which is too soft to sell into. Bottom row turned green.”
Bitcoin returns have been poor when the miners sold less than they mined and strong when they sold more than they mined.
This Mossis explained has nothing to do with the upcoming halving in May 2020, but counter-intuitive. “Historically, they have built up inventory during bear markets and sold it down during bull markets,’ said Morris.
This week, about 13,000 BTC has also been moved to new PlusTokens mix deposits. Though it does not necessarily mean a sell-off in the immediate future, there is certainly a rising probability of it now.
~13k in new PlusToken mixer deposits in last 24 hrs.
Almost all previous mixer deposit change has entered mixing, confirming my theory.
Distributions still on/off. Much slower than September and November.
New report and full sit rep imminent. pic.twitter.com/vwrBuVk272
— Ergo ∴TxIDs Or It Didn't Happen∴ (@ErgoBTC) March 6, 2020
Also, the trading volume has been drying up since last week. We have been seeing less than the 2020 staple of over a billion-dollar exchanging hands-on top ten exchanges with real volume. Moreover, this sudden drop led to the liquidation of a whopping $19.25 million on BitMEX and $1.5 million on Bitfinex.