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Bitcoin has continued its cataclysmic November, with price dropping further overnight to levels not seen since this May. Although it is little consolation, it never hurts to examine potential reasons following a crash, so without further adoâŠ
1. BitMEX Dumping On The Market
Yes, weâve said it before, but that doesnât make it less true. One entity that gains whichever way the market goes is BitMEX. Liquidated positions on the futures exchange lead to huge fees collected, which BitMEX has no qualms about dumping straight back onto the market.
According to analyst, Alex KrĂŒgerâ, BitMEX is currently raking in fees as much as 7% of the total combined miner issuance. A large percentage of this is sold right back into the market.
So those taking highly leveraged bets on bitcoin through BitMEX are not only putting themselves in a position to very likely get Rekt. They are also potentially damaging for the whole market. Sadly, a lack of volume on BitMEX isnât necessarily any better.
2. Shaken Confidence After Drop To $7k
Whenever there is a significant drop in BTC price, such as the pre-weekend dump to $7k, many investors lose confidence. Concerned about further losses, they jump ship, and accelerate the assetâs decline.
This âshaking out of weak handsâ is not of great concern to longer term HODLers, or those wishing to increase their bitcoin bags. After all, some idiots need to buy high and sell low, so that they can do the opposite.
3. Bitcoin Doesnât Always Respond To Macro Variables
The US Federal Reserveâs continued policy of quantitive easing was supposed to be bullish for bitcoin, right? Well that narrative hasnât exactly played out so far. Unfortunately, Bitcoin doesnât always respond to such macro variables.
Again, pointed out by KrĂŒgerâ:
It is such an illiquid/fragmented market that in the absence of mass influx of new buyers, actions of a few determine direction. Micro, not macro.
4. Bitcoin Whales Stocking Up Before Halving
In a market which is readily influenced by the actions of a few, we canât discount the possibility that bitcoin whales are putting downwards pressure on price, in order to stock up on BTC before next yearâs halving event.
The general consensus is that this will lead to a significant (and perhaps permanent) price increase, so it makes perfect sense to be holding as much as possible before then.
Of course, this doesnât only apply to whales.
Why do you think Bitcoinâs price is crashing so hard right now? Add your thoughts below!
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The post 4 Reasons Why Bitcoin Price Continues to Crash appeared first on Bitcoinist.com.
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