What Caused Bitcoin to Fall Back Below $7,000?
While the stock market is closed today on the occasion of Good Friday, crypto markets are open like they are always. And they are in the mix.
After trading above $7,000 for the better part of the week, yesterday, we fell below this level and are still trading down around $6,850.
As we reported, before this dump, a huge amount of BTC was transferred to the crypto exchanges which indicated an incoming sell-off and we got one.
Bitcoin flows into and out of exchanges can tell a lot about the potential crypto market activity. As we saw during March’s massive sell-off when BTC price fell by 50%, a total of 80,000 BTC went into crypto derivatives platform BitMEX between March 12th and 13th. 52,000 BTC also moved out of BitMEX where the price of bitcoin dropped to $3,600 compared to $3,850 on other exchanges.
According to crypto data tracker, Coin Metrics, this time, 1,000 BTC were deposited on Huobi exchange just before the price dropped below $7k.
Crypto data analyzer Glassnode also noted that a whopping 150,000 BTC spike in raw volume was recorded on April 11. This volume, however, was caused by the change from an in-house transaction on crypto exchange Bitfinex.
The total raw volume has been 216,244 BTC worth $1.49 billion and change-adjusted volume was 38,179 BTC worth $263 million.
Funds movement on exchanges presented us with a potential upcoming movement in the market which this time translated into a drop in price. However, Bitcoin is still over 75% above the low we put in mid-March. Analyst Mati Greenspan said,
“Bitcoin has remained remarkably stable in the last few weeks and if we zoom out on the chart we can see something quite comforting. The level that it's trading at now, similar to the stock market, is a level that would have been deemed quite normal throughout 2018 and 2019.”
“This is happening with the third halving only a month away.”
The halving is now officially just a month away, with the estimated date May 11 as miners continue to add more hash power to the Bitcoin Network.
— PlanB (@100trillionUSD) April 11, 2020
Since falling to about 94 Th/s on March 22, we have recovered 12.5%. The growing hash power is also because of the halving experienced by Bitcoin Cash and Bitcoin SV. Previously BTC accounted for 97% share of hash rate which has now increased to 99% while both BCH and BSV’s share that was just 3% further fell to 1%.
As for the price which is trading at a significant discount compared to the historical trend and the Stock-to-flow model, “BTC price will take some time to crawl towards model value (like after Nov2012 and Jul2016 halving),” said analyst PlanB.