Bitcoin fell sharply early Monday after failing to break into above $ 40,000 over the weekend.
In the past 24 hours, the cryptocurrency declined more than $ 8,000 to $ 32,400, a decrease of over 20% from the late Sunday (UTC) level of over $ 40,800. Most recently, the cryptocurrency was found to change hands easily near $ 35,380 – still 13.6% on a 24-hour basis.
Prices hit a record high of $ 41,962 on Jan. 8, ending the last week at a 15% gain, the fourth straight double-digit weekly gain according to CoinDesk 20.
“Heavy spot selling against an over-leveraged market caused the price to drop,” trader and analyst Alex Kruger told CoinDesk, adding it was unclear whether it was mine sales or macro traders liquidating positions.
Data from South Korea-based analytics firm CryptoQuant suggests miners’ sales contributed to the drop in prices.
The Miner’s Position Index (MPI) 30-day average – the ratio of total outflows from miners in US dollars divided by the 365-day moving average of outflows in US dollars – rose to 2.20 on Sunday, the highest since July 2019. A value above 2.00 indicates that miners are selling.
“The Miner Position Index is looking to hit a local peak. They sell Bitcoin, ”tweeted Ki Young Ju, CEO of CryptoQuant, on Sunday.
There were some panic selling on the US crypto exchange Coinbase. A sell order for 180 bitcoin on Coinbase quickly dropped the price by $ 1,200, as trader @lightcrypto noted.
According to Matthew Dibb, Co-Founder and COO of Stack Funds, a comment by CIO Scott Minerd of CIG at Guggenheim Partners that Bitcoin’s sharp surge is “unsustainable” has potentially fueled fear and caused an exaggerated retreat.
Most observers believe that the fall in prices is healthy in the face of the overheated market.
“The derivatives market can relax a bit, as the financing rate or the cost of holding longs decrease and the futures premium decreases,” said Patrick Heusser, trading manager of Crypto Broker AG, based in Zurich, to CoinDesk market and long liquidations valued at nearly $ 1 billion.
Joel Kruger, currency strategist at LMAX Digital, said the market is heavily overbought and in need of a healthy correction. In fact, the 14-day Relative Strength Index (RSI) on the daily chart was well above 70.00, suggesting overbought conditions over the past week.
“The outlook remains very constructive, but we would not rule out the possibility of the previous $ 20,000 support being withdrawn,” added Kruger.
