Bitcoin (BTC) has just lost the key support of $7,000 after trading above this level for over a week. This marks the first bout of volatility the cryptocurrency market has seen in weeks and, as such, may imply that a larger move in the downward direction may take place in the coming days.
Bitcoin Drops Below $7,000 as Bears Apply Pressure
After holding $7,000 for weeks, Bitcoin on Monday morning (PST) fell under $7,000 is a strong spike lower, falling from $7,100 to as low as $6,820 in 15 minutes’ time. Data site Skew Markets suggests that $40 million worth of BitMEX longs were liquidated in this strong move to the downside.
Liquidated long on XBTUSD: Sell 5,823,961 @ 6856.5 🏅💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯💯🔥⚡ ~ M-M-M-M-Monster kill ~ Nuke it from orbit, it's the only way to be sure
— REKT (@BXRekt) December 16, 2019
Due to the recency of the move, analysts are still trying to pick up the pieces in determining what contributed to this latest price drop.
Popular digital asset trader Hsaka just now noted that prior to Bitcoin’s drop, second-largest cryptocurrency Ethereum suddenly slumped, falling 3% in literal minutes. There is a high likelihood that BTC is following ETH’s price action, which is a trend that has been seen before in recent cryptocurrency market history. After all, large-cap cryptocurrencies are all closely correlated, save for XRP.
Hsaka later corroborated this, noting that Ethereum led Bitcoin’s decline by some two minutes.
— Hsaka (@HsakaTrades) December 16, 2019
This drop comes shortly after a report from Chainalysis, shared by Bloomberg, revealed that the PlusToken Ponzi scheme, which managed to accrue billions worth of Bitcoin and Ethereum and other tokens over the course of a year, has been dumping thousands of coins per month on the open market.
The new bout of publicity that PlusToken has seen may have triggered the scam operators to dump more tokens on the open market to lock in profits before law enforcement catches up to them.
There’s also this simple technical observation from trader CryptoISO, which shows that Ethereum was trading in a clear descending triangle prior to the latest sell-off, again implying that ETH was leading BTC.
— CryptoISO (@crypto_iso) December 16, 2019
Now on Thin Ice
This move drives Bitcoin back into a precarious price situation, with $7,000 acting as a key level in this cycle and the last.
Some fear that consecutive closes in this range could imply a return to local lows at $6,500.
Featured Image from Shutterstock