After a volatile 10 days during which Bitcoin hit an all-time high but also dipped as much as 20% before holding around the $55,000 level, the world’s oldest and largest cryptocurrency has resumed plummeting as it heads into the weekend. What is happening and why?
Bitcoin’s price turmoil started with the Coinbase public offering on April 14, an event regarded by some as a potential tipping point for crypto going mainstream. Bitcoin surged to a new all-time high of US$64,787.65 that day.
But then news broke that many of Coinbase’s largest shareholders and investors had sold off around US$5 billion worth of COIN stock on its first day of trading — with CEO Brian Armstrong selling almost US$300 million of his own. Mass liquidations followed throughout the weekend.
During last weekend’s carnage, Bitcoin crashed through a key threshold, its 50-day moving average of US$56,000, a level Bitcoin had held as “sacrosanct since Q4 of last year” said Pankaj Balani, CEO of Delta Exchange, in an email to Forkast.News.
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“Bitcoin found resistance at 60K prior to the Coinbase listing. The listing euphoria pushed BTC above the $64,000 mark but it gave away all gains amid a tepid listing. Since then we have seen selling pressure on Bitcoin.” Balani said, “BTC attempted to pull back above this key support but failed to garner any fresh buying interest.”
Henry Chong, CEO of licensed digitial securities exchange Fusang, told Forkast.News that Bitcoin’s plummet should not be surprising considering the price drama last week.
“With the recent massive rise in Bitcoin prices, the current price pullback is both normal and healthy,” Chong said. “Keep in mind, it was only a few weeks ago that the current price was an all-time high.”
Where to next for Bitcoin?
Some Bitcoin advocates are viewing Bitcoin’s price decline as an opportunity to “buy the dip.” But the short sellers are currently dominating the futures market, which suggest an overall market expectation for a further decline in Bitcoin’s price.
In an interview with Forkast.News, Toya Zhang, chief operating officer of AAX exchange, said that the short sentiment is what she expected — but it is not what data from AAX is reflecting.
“I checked our long volume of Bitcoin versus shorts, and it’s actually 10 times higher.” Zhang said. “In terms of futures, there are five times more users long on Bitcoin versus short sellers at this moment.”
The data from AAX indicates that its user base, which is mostly in Asia, remains very bullish on BTC continuing to rise in the long term, Zhang added.
But she noted that spot-trading volume on AAX was down, which could either indicate that its users are waiting for the “next bullish signal” or are waiting for the “the price to slash even further.”
Lennix Lai, director of financial markets at cryptocurrency exchange OKEx, told Forkast.News that he expects Bitcoin prices to “likely stabilize at around $50K given that $1.55 billion in Bitcoin options are set to expire today (April 23),” but believes a “deeper price correction in the short term to around $45K” is very possible.
“It is part of the deleveraging process of Bitcoin and the market remains relatively stable for the time being,” Lai said. “We are not seeing any risk-off situations like what happened back in March 2020.”
Meanwhile, the second largest cryptocurrency, Ethereum (Ether), has also taken a downward turn, losing 11.52% of its value over the past 24 hours. But Ether reached a new all-time high above $2,600 just yesterday.
At publication time, Bitcoin is trading at around US48,000 and the overall cryptocurrency market cap is now US$1.76 trillion, shedding over 12.2% in the last 24 hours.