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Here are the Key Factors Helping to Drive Bitcoin’s Price Lower

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  • After a short bout of trading above $11,000, Bitcoin has witnessed massive inflows of selling pressure that have slowed its ascent and stopped it from seeing any major upside
  • The cryptocurrency is now at grave risk of seeing further losses, with analysts noting that it may soon visit its key $10,200 support
  • A break below this level could lead to serious losses, with bears potentially moving to fill the CME gap that exists around $9,700
  • There do appear to be a few key factors behind this move, with spike in exchange inflows, strength in the US Dollar, and technical weakness all pushing it lower

Bitcoin and the entire cryptocurrency market are witnessing some blood today. BTC’s price has faced a severe correction following a short-term bout of trading above $11,000.

This recent upswing came about after an extended period of consolidation within the upper-$10,000 region. The crypto was able to venture as high as $11,200 before it lost its momentum and slid lower.

While speaking about this, one analyst explained that there are a few factors likely perpetuating this move, with technical weakness resulting from the recent rejection being just one.

Bitcoin Struggles to Find Support as Selling Pressure Ramps Up

Bitcoin and the entire market are seeing a red day, with BTC’s decline creating massive headwinds that have erased nearly all the gains posted by altcoins in recent times.

At the time of writing, Bitcoin is trading down over 3% at its current price of $10,600. Bulls have established this price as a slight region of support, although it is important to note that it has yet to post any ardent response to tapping this level.

Until it reaches the lower-$10,000 region it may not find any massive buying pressure. This means that further short-term losses may be imminent for BTC.

Analyst: These Factors are Likely Behind Today’s BTC Plunge

One analyst, while speaking about Bitcoin’s technical outlook, explained that he sees a few main factors that are driving this move lower.

He points to a trend seen while looking towards exchange inflows, strength in the US Dollar Index (DXY), and technical uncertainty.

“There’ve been decreasing onchain spikes of exchange inflows recently indicating short-term selling pressure increase. Combined with DXY and its uncertainty from the technical side (sideways, head & shoulders), it adds to BTC XAU XAG volatility,” he said.

Image Courtesy of CryptoBirb.

How Bitcoin and the crypto market trend next may depend largely on how the benchmark stock indices trade in the coming few days.

Featured image from Unsplash.
Pricing data via TradingView.





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Bitcoin

Ethereum eyes 3-week winning streak vs. Bitcoin as BTC price drifts below $39K

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Bitcoin (BTC) headed lower on Aug. 5 after an attempt to reclaim $40,000 failed to garner buyer support.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Accumulation recalls October 2020

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dropping to local lows of $38,700 on Bitstamp, down around 1.5% in several hours.

The largest cryptocurrency had benefited considerably from remarks by Gary Gensler, the new Chair of United States regulator, the Securities and Exchange Commission (SEC), Tuesday, but momentum stalled at the psychologically significant $40,000 mark.

Thursday’s dip took away the prospect of flipping the 21-week exponential moving average, (EMA), one of several eyed by analysts this week, as firm new support.

Meanwhile, on-chain indicators once again contrasted with middling BTC price action. In particular, Thursday revealed the extent of long-term holder (LTH) Bitcoin accumulation, this reaching new all-time highs: more of the BTC supply was now in the hands of LTHs than ever before.

“Previous bull markets were triggered when LTH supply reached between 63.6% and 71.5% although often after many months at these levels,” Glassnode, which produced the data, added in comments.

“LTHs currently hold 66% of the $BTC supply.”

Proportional long- and short-term holder supply chart. Source: Glassnode/ Twitter

Traders bullish on Ethereum after hard fork

On altcoins, Ether (ETH) dominated the conversation amid bullish forecasts for fresh price gains.

Related: Altcoins and DeFi tokens push higher as Bitcoin price falters at $40K

Ethereum’s token could reach new local highs in the coming months after its latest successful hard fork, analysts forecast as strength against Bitcoin continued.

ETH/BTC hit 0.0693 on Aug. 4, the date of the hard fork deployment — its highest in nearly two months. 

A local resistance point, the 0.07 BTC level has yet to reappear since the Bitcoin-inspired market drawdown began in May.

Nonetheless, among altcoins, ETH has exhibited notable strength against Bitcoin, and its hard fork, London, referred to as EIP-1559, should catalyze performance further.

For the short term, however, a chance to consolidate recent gains is on the cards, say traders.

“I’m expecting a short-term top to be happening tomorrow on ETH,” Cointelegraph contributor Michael van de Poppe told Twitter followers Wednesday. 

“Healthy correction after EIP-1559 before the heaviest bull run of them all happens.”

ETH/BTC 1-day candle chart (Bitstamp). Source: TradingView