The factors that caused the massive price drop for 1 BTC block are not as obvious as we might think.
The price of the world’s most popular cryptocurrency fell from $10,000 to $8,100 within 24 hours. Such a sharp decline was more than $290 million liquidations in a long position on futures contracts.
Strong level of resistance
For over 2 years, the area of strong resistance encountered by Bitcoin has been $10,200-10,500. This historic area is extremely hard to break through, and out of six attempts in the last 2 years, only one has succeeded, and BTC’s price in 2019 rise from $10,500 to $14,000.
Bitcoin, on May 8th, rejected a price of $10,100, so the key level of resistance was not reached. The players with the most capital (whales) knowing that an adjustment can significantly reduce the price of BTC, started to liquidate their contracts. On platforms such as BitMEX and Binance Futures, investors have liquidated a total of nearly $300 million in long positions.
Currently, the vast majority of the market maintains short positions in futures contracts, expecting further declines in BTC.
Bitcoin halving coming up
Before the split of the prize from 12.5 to 6.25 BTC for the extraction of the block, which will take place on 12 May, the volume of the crypto transactions increased significantly. Many stock exchanges are reporting record volume in sales of BTC or futures contracts.
When many new investors entered the market, it opened a large selloff. After halving in 2016, BTC’s price dropped by over 30% as traders responded to the drop in sales.
Factors such as Bitcoin’s extended rally to $10,000, whale actions moving down the market, the large sale of BTC and the high expectations of halving event to take place on 12 May are causing BTC’s price to fall in the short term.
According to market analysts, such fluctuations in Bitcoin’s price are temporary, but in the long run, BTC price, including other cryptocurrencies, should go significantly up.