By
Steve Muchoki
April 19th, 2024
Yesterday for the second time in June 2020 Bitcoin price collapsed 10%. The drop coincided with the significant crash of the Dow Jones index.
Yet again, the world’s largest cryptocurrency Bitcoin faces major resistance at $10,500 levels. On Thursday, June 11, the Bitcoin price crashed 11% from $10,100 levels falling all the way to $9012 levels. Although there’s no certain reason for the Bitcoin price crash, it very much coincides with the Dow Jones Industrial Average (INDEXDJX: .DJI) crashing 6.90% on Thursday.
Well, this is the second this year that the BTC price movement is following the traditional stock market. The first one was the March 2020 stock market and crypto market crash due to the COVID-19 pandemic.
Is Bitcoin Crash related to the Dow Performance?
Note that the Bitcoin price on Thursday crashed over 10% soon after the pre-market data showed a 900 point on the Dow Jones. On Thursday, the index opened 3% down as the losses extended further up to 7% by the day end.
Experts think that one cannot actually relate the BTC price drop with Thursday’s market crash. However, it is the uncertainty across the asset class which has triggered the short-term BTC price crash. Apart from Bitcoin, other store-of-value assets also sunk simultaneously. After the early momentum in June, even gold price was 1% down on Thursday.
The BTC price crash, however, has triggered the liquidation of long contracts in the futures market. Currently, in the futures market, traders are leveraging around 125x which increases the chances of BTC pullback in a short period of time. The volume of the spot market has been declining since May. Hence, we can say that futures trading has affected the price of Bitcoin largely.
Miner Liquidation and BTC Price Target
Post the Bitcoin halving last month, even miners have been playing a crucial role in dragging the BTC price downwards. Since the miner rewards are cut to half and profitability has sunk majorly all the miners who mined massive BTC before halving are systematically liquidating their stuff.
The recent data from ByteTree also shows that miners have been selling more than what they have been mining on a daily basis.
Now, with Bitcoin repeatedly failing to cross its $10,5000 resistance, traders are getting confused as to what can be the next move. On the lower side, $9100-$9300 remains strong support for Bitcoin. Michael van de Poppe, a full-time Amsterdam Stock Exchange trader, remains optimistic about the short-term trend of Bitcoin. He said:
“If we break $10,000, next level is $10,500. If we break $10,500, next level is $11,500-12,000. Crucial level to hold; $9,100-9,300.”
Mohit Sorout, a founding partner of Bitazu Capital says that BTC can soon see a breakout from its two-year cycle.
Time for $btc to breakout within ~7 days. pic.twitter.com/U9qZJRQTCZ
— Mohit Sorout 📈 (@singhsoro) June 10, 2020
Bitcoin has remained much volatile so far this month. On June 7 BTC price plunged to $9300 levels. Soon three days later on June 10, it recovered back to above $10,000. At press time, BTC is trading at a price of $9338 with a market cap of $171 billion.