November 15 2018 | AtoZMarkets
In the late hours of yesterday, Bitcoin finally broke below 5800-6000 support zone after holding steadfastly above it for many months. As price hits a fresh 2018 low, here are the five likely reasons for the drop.
Over a long period, Crypto traders, investors and enthusiasts have waited for a price breakout. The Crypto community was divided into two opinions – bullish and bearish. Of course there was one other group that was undecided and prepared for whichever direction the breakout happens. More traders who use technical analysis believed the breakout would happen downside and price would take a new low as the year runs out. Most pointed to a bearish descending triangle pattern printed on the BTCUSD chart. Yesterday, we covered an opinion of a popular Crypto technical analyst who predicted that the bearish trend would continue till mid-June. The bullish support couldn’t hold any longer and the selling pressure led to a big breakout downside. At the time of writing, Bitcoin was trading at $5400 losing 12% in the last 24 hours.
As usual, most Crypto coins and tokens followed this path. On CoinMarketcap, Ripple which overtook Ethereum as the second most capitalized crypto currency dropped 8% while Ethereum which now stands at the 3rd position dropped by 12% in the last 24 hours. Bitcoin market cap dropped below $100 billion for the first time this year (now at $96 billion) while Ripple and Ethereum stayed marginally above $18 billion. BTC trade volume jumped by nearly $4 billion as sellers took advantage of the big move.
Aside the technical analysis side, here are five fundamental reasons why BTC dropped.
5 Reasons Why Bitcoin Dropped
Reason 1 : Bitcoin Cash (BCH) Chaos
The market started to react negatively to the Bitcoin cash hard fork problems. There was a perception that digital assets are less immune to attack than expected, since networks are still somehow human-dependent. The uncertainties surrounding BCH and by extension Bitmain might be putting pressure on the prices of Bitcoin.
Reason 2: Bitmex Speculation
On Bitmex, a crypto exchange, prices and volumes are not included in the general Bitcoin statistics thereby making trading highly risky. The fallen BTC prices on Bitmex revealed the bearish sentiments which might have spilled into the general market.
Reason 3: Dwindling mining operations
Bitcoin miners are gradually giving up after prices dropped to $6000. Miners have to deal with high mining difficulties alongside a lower BTC price. Most are expected to breakeven at $5800 but with an expectation that price would rise. The long wait and the fear of an eventual price fall reduces mining operations with some running at loss.
Reason 4: Bearish technical forecasts
There were beliefs that price has not bottomed yet. Many technical tools pointed at continued bearish move after price eventually break below $6000. A bearish triangle pattern was holding firmly. With price failing to hit upside after many attempts, suspicions of bearish breakouts arose and many long holders would eventually give up and price would drop to a new year low.
Reason 5: Trader’s exodus to USDT
According to data from cryptocompare, close to 2/3rd of BTC trading activities happened on the BTC/USDT pair. This shows traders’ search for a more stable-priced coin. There are fears that BTC is not stable and some traders quickly store their funds with coins that they perceived are more stable. This means that traders’ confidence is getting lower, which does not sound well for the big BTC.
Are there other reasons why you think BTC fell? Please share with us in the comment box below.