Bitcoin is trading sideways because some traders and miners continue to sell.
Written by: CryptoQuant
Translation: Wang Jiaxin
Last Tuesday, Bitcoin rose to 19,800 U.S. dollars and broke through the historical high and failed to continue its gains. It fell to 18,000 U.S. dollars on the same day. The price has risen to 19200 again on the 7th.
It is reported that there are a large number of traditional financial institutions actively participating in bitcoin transactions in the ranks of blockchain acquisitions. Greyscale, which operates bitcoin investment trust products, acquired more than 7000 bitcoins in a single day. The good news is one after another, but what is the reason why the price of Bitcoin has not exceeded $20,000?
20,000 USD benchmark
The first reason for Bitcoin’s sharp sideways is that some traders continue to sell in large quantities in order to keep the price not exceeding $20,000. The “average value of exchange deposits” mentioned in the last week’s issue is still very unstable this week.
Trend of the average value of currency deposits on exchanges: increase in deposit volume → decrease in currency price
As shown in the figure above, the red circle marks the interval where the “average value of deposits on the exchange is greater than 2”. Since many giant whales are involved in Bitcoin transactions in this interval, there has been a large number of liquidity-based selling in the market. The price began to fluctuate actively; when the value is greater than 2, it can be seen that the price after a slight correction has fallen sharply.
The old giant whale expects currency prices to fall
The second reason is attributed to the sharp decline in the average value of the exchange currency. If the whale believes that the price of Bitcoin will increase, they will withdraw a large amount of coins from the exchange and then transfer them to a safe custodial wallet. But since November 26, this move has decreased dramatically.
The trend of the average value of the exchange currency
In response to this phenomenon, the industry speculates that some of the old giant whales who had previously gained wealth by speculating in Bitcoin have recently ceased to engage in activities that are conducive to the rise in the price of the currency. The price fell.
Most of the old giant whales or miners, or investors in crypto hedge funds, or people who have invested in Bitcoin for a long time to get rich, they will frequently move the number of Bitcoins that will not be sold in the near future to their wallets outside the exchange. .
Miners sell off
The third reason is that miners who have not traded for a long time suddenly started to sell Bitcoin. This year, the Miner’s Position Index (MPI), which has continued to maintain negative growth this year, is currently at a high level of 1.5 based on a 30-day moving average. Although it will not end the current bull market, the number of sell-offs is large enough to give Bitcoin from time to time. The rally is pouring cold water.
Miner Position Index (MPI) Trend
Total amount of Bitcoin on the exchange
The continuous increase in the total amount of bitcoin in cryptocurrency exchanges has also blocked the rise of bitcoin. In fact, when the currency price exceeded $10,000 in August this year, the total amount of Bitcoin rose slightly. At that time, the currency price finally resumed its upward trend after falling by $1,000 after a month of sideways trading. After speculation, the correction in December may also bottom out after a period of sideways.
The total amount of bitcoins in the exchange chart, the yellow circle indicates that the total amount continues to rise after the decline
Judging from the exchange order data, there have been many selling orders for Bitcoin near $19,500 and $20,000. American analyst Edward Morra called this situation the “Battle of Stalingrad.” If Bitcoin is to break through the high of $20,000, there must be another massive sell-off.
Bitcoin order data, the yellow line indicates the sell order of the whale
In the current overheated market, traders of the day should consider the risk of excessive upward investment at this time; for long-term investors, the current situation is very conducive to the acquisition of Bitcoin. Bitcoin will definitely break through the historical high of $20,000 at the end of this year or early next year.
