Bitcoin’s price fell sharply yesterday afternoon, dropping as low as $9,300. But what caused it — miners or traders?
After a day of marvelling at Bitcoin’s coins price spike yesterday, it only seems fair that today’s article discusses the pullback in which Bitcoin dropped from over $10,000 dollars down to $9,300.
At the time of writing, the price has recovered somewhat to $9,500. In dropping down this low however, Bitcoin has broken through many lines of support it had been developing in the upper $9,000s. Below it now remains a vital support line at $9,300. Should Bitcoin break below this, a tumble to $8,500 could well be on the cards.
The crypto community have been left scratching their heads over what could have caused such a sudden and dramatic drop in price. OKCoin’s head of Market Development, Matthew Ficke, believes that the change was as a result of traders reacting to the previous day’s spike up above $10,000. Short term traders, according to Ficke, took advantage of the previous price high to sell off and get a better position.
Not everyone is in the same camp as Ficke however, with many pointing fingers at an unknown miners pool. There have been sizeable outflows from miners’ wallets associated with this pool recently. Many believe that the post-halving squeeze on miners is causing lots of them to sell their coins.
Ki Young Ju, the CEO of CryptoQuant, is one such believer that the unknown mining pool is responsible. It has mined 637.5 BTC in the past four days. This pool, the biggest unknown mining pool in the world, is also the fifth largest in terms of hash rate.
Since May 20 — another trading day that saw a large drop in price — this pool has shifted 12,571 BTC from its wallets; usually an indication it is preparing to sell. Such a large volume of Bitcoin being sold exerts a strong downward pressure onto the price. May 20 is an important date because the same pattern of a huge outflow of Bitcoin from wallets acted as a precursor to a huge price drop, just like yesterday afternoon.
Decreased profitability has been making it increasingly difficult for miners to stay in business, especially in smaller pools. The likelihood is that more sell-offs from miners’ wallets will be seen over the coming weeks, if not months. As such, there is potential for many more days like this to come.