Bitcoin’s price is now back at $20,000, after some recovery over the weekend. As a result of increased selling pressure and the macroeconomic climate, Bitcoin fell to number one in market capital.
Related Reading | Bitcoin Derivatives Exchange Reserve Surges Up As BTC Continues To Plunge
Bitcoin (BTC), which trades at $20,000.500, has made a profit of 6% in 24 hours. However, the past seven days show a dramatic change with a 24% drop.
Arthur Hayes was the former BitMEX CEO claimsThe increase in selling price was caused by an institution-forced seller. An entity that was forced to liquidate its positions as BTC’s price trended further downside.
Hayes believes that Canada’s Bitcoin Purpose Exchange Traded Fund (ETF) was potentially responsible for the downside price action. The investment vehicle is settled by physical BTC and, according to Purpose, when a client buys the ETF, they are buying “real Bitcoin”.
The former BitMEX CEO claimed he is unfamiliar with this ETF’s redemption process. The market appears to have been flooded with 24,500 BTC by the investment vehicle, as shown below.
This represents almost 50% of the ETF’s assets, if the BTC was sold in a rush, it seems logical that Bitcoin lost support at around $20,000 and was forced to trade lower with the rest of the crypto market. The downside price movement was absorbed by buyers who showed up.
Bitcoin was able to recover the $20,000 mark and this showed how Bitcoin can be bought quickly at lower levels. Hayes said the following about the conditions that took BTC’s price to fresh lows, and why it experienced relief:
While the fiat rails remain closed over the weekend, $BTC plunged to a $17600 low, almost 20% lower than Friday due to high volumes. This smells almost like a seller forced into selling. Market rallied swiftly on low volumes after sellers were forced to dump their stuff.
The Pain of Bitcoin: Why it Could Have More
Although the initial reaction was positive to the downward pressure, Hayes pointed out that it occurred during a weekend of low volumes across all exchange platforms. The crypto market could see BTC’s price taking another swing at the lows. Former CEO stated:
Due to the inept risk management of cryptocurrency lenders, and the generous lending terms, there will be more forced sales of $BTC/$ETH. The market is figuring out who’s naked.
Similar Reading| TA: Bitcoin Recovery Stalls in the Nearest Key Juncture. Key Resistance Intact
As this structure, which contributes to spikes in selling pressure, remains intact bears could continue pushing B’C’s price down. Hayes said that in the interim, longer-term players still have an opportunity for increasing their holdings.
Is it over yet … I don’t know. For those with a good knife grasp, however, you may still be able to purchase coins from people who will whack any bid regardless of its price.
