Bloodbath Continues: Here’s Why Bitcoin Flash Crashes Below $7,000
- Bitcoin price drops to the level last seen six months back
- High network difficulty, miner’s selling pressure, and China taking further measures to clamp down on crypto trading could be behind this crash
Yet another red for Bitcoin.
Just yesterday we went down hard when we flash crashed from $8,200 to $7,400. Now today, another flash crash has the leading cryptocurrency down below $7,000 at $6,929 on Bitstamp. This level was last seen in mid-May.
In the past two days, Bitcoin has lost about 15.5% of its value and has wiped out all the gains made on Oct. 25-26.
At the time of writing, BTC/USD has been trading at $7,070 as per Coincodex, while managing the daily trading volume of $673.5 million, up from $175 million registered earlier this week.
This deep loss in Bitcoin value has the altcoins in free fall. Top altcoins are down by 7 to 13%. Today’s top losers are Maker and Link with 23 and 21% losses respectively. Meanwhile, Tezos is the only top coin in green by 0.41%.
What’s Behind this Crash?
According to crypto exchange OKEx’s latest report, high network difficulty and miner’s selling pressure could be the reason behind this Bitcoin selloff. The difficulty reached a new all-time high in early November, right after the time BTC climbed to $10,500 level. Though it has slightly retreated now, it’s still at a “fairly high level.”
“The difficulty ribbon shows that miners have been facing increasing selling pressure as the prices of bitcoin unable to extend its October gains.”
The pullback in price apparently was unable to justify the relatively high levels of network difficulty. As such the miners are selling their newly mined BTC and this could “accelerate the selloff, further fueling the bears in the markets.”
Another reason could be the People's Bank of China's Shanghai head office releasing a new regulatory notice urging to clamp down on cryptocurrency trading. Also, they have identified 39 “illegal cryptocurrency” companies on which action will be taken.
— Alex Krüger (@krugermacro) November 22, 2019
“Bitcoin is Dying” or “Black Friday came early”
With Bitcoin and altcoins swimming in the red sea, it won’t be long before we get to see another “Bitcoin is dead” article in the mainstream media.
— Preston Pysh (@PrestonPysh) November 21, 2019
It has actually started already.
Hedge fund manager and economist, Mark Dow who shorted the 2017 Bitcoin bubble top is saying “Bitcoin is dying.”
— Dow (@mark_dow) November 21, 2019
But it won’t be any new for the flagship cryptocurrency. A drop to this level has been, in fact, called out by many analysts last month. The Cryptomist was one such analyst who has been expecting the CME gaps to be filled and predicting a drop to $7,100.
Yesterday, analyst CryptoGainz also stated, “Price needs to reclaim 7.8k or the pain continues.”
However, looks like gold proponent and a Bitcoin hater, Peter Schiff’s dart thrown in the dark hit the target somewhat this time. He didn’t miss the chance to rub it in CT’s face the fact that Bitcoin lost 100% of the gains in just four weeks, which he says is a “classic pump and dump” and BTC buyers being “played.”
When the #Bitcoin community reports on my bearish forecasts, they always include that I'm biased against Bitcoin. Yet when they report on bullish forecasts made by people whose livelihoods depend on Bitcoin going up, they never mention that they're biased in favor of Bitcoin.
— Peter Schiff (@PeterSchiff) November 21, 2019
These dips, however, can be taken as an opportunity to stack some more sats as CNBC’s Crypto Trader host, Ran NeuNer says, “Black Friday came early this year.”