11% Bitcoin Price Drop: Whales Movement of BTC to Exchanges May Be Reason for It

Updated on Nov 26, 2020 at 4:58 pm UTC by · 3 min read

Bitcoin was nearly hitting a new all-time high earlier this week after it rose $19,469 for the first time since December 2017. However, today, it lost around 11% of its value.

Analysts’ expectations come true as BTC fails to overcome the $20,000 all-time highs. After Bitcoin price rose to a high of $19,580, it experienced a sudden drop to $17,250.

According to Cointelegraph Markets and TradingView data on Wednesday, BTC/USD experienced major volatility overnight, causing it to lose nearly $2,000 in just a matter of few hours. During the day’s trading, BTC hit highs of $19,500, but bearish indecision in the after-hours led to a sharp sell-off making it to fall to around $17,000. It later bounced to $17,250 to cap its daily losses. At the time of writing, BTC is trading at $17,057, which means that it has lost 11.23% in 24 hours.

Trader Tone Vays and CNBC host Brian Kelly are some of the analysts who had earlier warned that it was a pullback that led to the recent gains. According to their Thursday forecast, BTC might even dip to as low as $14,000. Popular Crypto Fear and Greed Index, amongst other several metrics, also joined the criticism suggesting that the popular crypto coin, which has enjoyed record-high levels throughout November, would soon experience a correction.

Bitcoin Price Drop Happened Due to Exchange Selling Pressure

Large-volume investors’ deposits of BTC to exchanges is thought to be the reason for the sudden price drop. Whales were trying to take profit near Bitcoin’s $20,000 all-time highs. They are known to buy or sell digital assets in high volumes.

On-chain analytics resource CryptoQuant, creator Ki-Young Ju, explained the scenario to various Twitter followers.


As per some analysts, a 7.3% uptick in mining difficulty expected in three days’ time and a continuously growing hash rate would make the market to be more bullish. At the time of writing, BTC was hovering around the $16,800-17,300 region.

Factors Preventing BTC from Crossing $20K Hurdle

BTC was nearly hitting a new all-time high earlier this week after it rose $19,469 for the first time since December 2017. However, even after attaining such a peak, a couple of significant factors prevented it from surpassing its record high.

First, a possible bull trap scenario was looming. ‘Bitcoin Jack’ – known for coming up with the phrase ‘Bitcoin bottom in March’ – coined the term ‘potential bull trap scenario’ to describe a point wherein long holders or late buyers become trapped owing to a digital asset price drop. Bitcoin Jack’s projected a price trend where a potential pullback would occur in the event that Bitcoin rejects the $19,200 to $19,300 area.

Second, Bitcoin would enter price discovery mode when it crosses $20,000, thereby searching for a new ceiling since there is a lack of evidence or historical data beyond that point. Many analysts and industry have predicted that BTC would, thereafter, settle anywhere between the $25,000 to $100,000 price range if that were to occur. Therefore, sellers are aggressively defending their interests by making BTC not to go past $20,000.

Thirdly, extremely high funding rates compel sellers to trade below $20,000. Bitcoin perpetual swap contract funding rates have been ranging from 0.05% to 0.1% across various major cryptocurrency exchanges. Meaning, a large part of short-sellers positions as fees is catered for by long contract holders or buyers. With the highly positive funding rates, short-sellers are compelled to hold the market below the $20,000 region aggressively.

Share:

Related Articles

Crypto News This Week: Raboo Presale Passes $1 Million Mark While Solana Slows and Bitcoin Price Hovers Near $60K

By May 3rd, 2024

Raboo is making the rounds among crypto news outlets after the initial stages of its presale drew over $1 million in fresh investment.

Thai Police Cracks Down on Illegal Bitcoin Mining, Seizes $2.5M Worth of Equipment

By May 3rd, 2024

In their latest crackdown, the Thai police recovered 690 units used for Bitcoin mining machines vaued at 2.54 million SGD. The police is also conducting raids at multiple locations.

Tether Steps Up Monitoring of Token Usage to Combat Illicit Finance

By May 3rd, 2024

This collaboration with Chainalysis provides Tether with advanced tools to detect transactions involving sanctioned e­ntities and track the activities of major token holde­rs.

Exit mobile version