Bitcoin Weekly News – Latest Updates

The price of Bitcoin (BTC) can refer to either the energy cost of maintaining and securing the Bitcoin network through mining or the market value of BTC at a particular moment or over the course of time. Most of the discourse tends to surround the latter. Bitcoin is a radically market-driven asset that is not backed by any commodity or central authority. As such, Bitcoin price movements tend to be volatile. Bitcoin’s price today will be different from Bitcoin’s price tomorrow. Ultimately, the price of Bitcoin is the result of the combined activities of a global community of stakeholders including miners, traders and consumers. Over the last couple of days, the price of Bitcoin has been very volatile. The price rose drastically in a matter of hours and then a sudden drop happened.

Bitcoin News
Bitcoin News

In this article, we will cover the newest information about Bitcoin. We will answer the question of why the sudden price drop happened. For more information, make sure you check the Coinbet24 blog. Our blog is listed among the best cryptocurrency based blogs at Top 20 Bitcoin Gambling & Betting Blogs. The Coinbet24 blog sits together with well-known names like CryptoGames, Bit Starz, Reddit, and more. Keep reading to learn more about Bitcoin and why it’s price has been so volatile.

Reasons for Bitcoin’s Volatile Price

The price of Bitcoin (BTC) rose to as high as $15,840 before crashing to $14,800. Just five hours after reaching an intraday top, the dominant cryptocurrency dropped over 6%. This massive spike in volatility was likely caused by three major factors. The three catalysts for the abrupt downtrend were the recovery of the dollar, the decline in gold price as Pfizer announced that its COVID-19 vaccine trials are producing positive results, and whales dumping BTC. According to the Associated Press, Pfizer announced that the third phase of its vaccine trials is going well. The pharmaceutical giant said its vaccine is currently proven to be 90% effective in COVID-19 prevention.

To date, Pfizer has tested the vaccine on  44,000 participants, and if it proves effective, the next step would be for the United States Food and Drug Administration to conduct its own tests before approving the vaccine for mass production and distribution. After the vaccine announcement, the Dow Jones Industrial Average surged 1,000 points, leading to a strong U.S. stock market rally. As the U.S. dollar and stocks triumphed, Bitcoin and gold dwindled simultaneously.

Michaël van de Poppe, a full-time trader at the Amsterdam Stock Exchange, pinpointed the recovery of the U.S. dollar index and suggested that alternative stores of value, like gold and Bitcoin, are priced against the dollar. As such, when the dollar recovers, the price of BTC could fall steeply alongside precious metals.

Huge Corporations are Selling

When the drop was happening, CryptoQuant, an on-chain market analysis firm were suggesting that whales were selling Bitcoin. Traders, like the pseudonymous investor “Byzantine General,” found a similar pattern. As Bitcoin dropped in a whale-induced pullback, retail investors were continuously longing BTC.

Whales had several attractive reasons to sell BTC at $15,800. First, it is a major resistance area right below a pivotal level at $16,000. If the $16,000 level breaks, technical analysts have said BTC would likely position for an all-time high. When whales sell, the market often sees a strong reaction. Whether whales would begin to take profit on their shorts and attempt to resume the bull trend remains unclear. For now, the pullback has stalled, with BTC recovering above $15,100, indicating a short-term trend reversal to the upside. However, long term players believe the price will go up even further. They are deciding to keep their coins for now.

Long Term Players

Despite the heightened level of volatility in the market, cryptocurrency trader Cantering Clark was sure in his claims that long-term investors are unlikely to be fazed. He said:

“This volatility is just fast money funds that play $BTC as a higher beta $GOLD dumping on vaccine news. The players that enter on behalf of the longer-term thesis for Bitcoin are not changing their positioning.”

In addition to the factors mentioned above, analysts at Glassnode noted that the current short-term holder activity is reminiscent of previous bull trends. As such, if BTC recovers strongly from the recent drop, the chances of a rally continuation could increase. Glassnode said:

“#Bitcoin Short-Term Holder MVRV has been holding its positive ratio for the past six months — and bounced off the neutral line yet another time. Historically, holding this support level is indicative for an ongoing $BTC bull market.”

Mining Bitcoin

It appears many Chinese miners have completed their annual migration from Sichuan, with Bitcoin’s hash rate spiking more than 40% in two days. The hash power of the Bitcoin (BTC) network has jumped by roughly 30% over the past 24 hours. If it stays like that, a major difficulty adjustment may soon be incoming. According to Coinwarz, Bitcoin’s hash rate currently sits at 157.5 exa-hashes per second, or EH/s, after briefly pushing above 160 EH/s. As of this writing, BTC hash power has increased by 42% in two days. The spike follows a sharp decline in hash power in late October, which many analysts attributed to the end of the rainy season in the Chinese mining hub of Sichuan. 

The province’s abundant and cheap hydroelectric power is estimated to attract around 80% of Chinese miners during the wet season. In December, CoinShares estimated that Sichuan accounted for 54% of global mining activity. Quantum Economics analyst Jason Deane speculated that the sudden increase in Bitcoin hash power could be a sign that many Chinese miners have completed their migration from Sichuan and restored operations in other local mining hubs such as Xinjian and Inner Mongolia. The sudden spike in mining activity suggests the network is likely to produce another significant difficulty adjustment. 

A major upward adjustment would come at the chagrin of non-Chinese miners who have been enjoying boosted profits after October’s apparent migration from Sichuan resulted in a 16% negative difficulty adjustment — the second-largest downwards adjustment in Bitcoin’s history. Earlier this week, the world’s largest generator of hydroelectric power for the private-sector, Russian firm En+ Group, announced it would be launching a cryptocurrency mining venture in partnership with local company BitRiver.

Conclusion

The above mentioned information suggests that there were several factors that caused the volatility. It has been a busy week for the US and the world and the impact was expected. The US elections were very close and it was days before a new president was chosen. In those days, the US dollar was fluctuating along side Bitcoin and other coins. Additionally, Pfizer are making claims that their Covid-19 vaccine is working great. Put these things together and you get a volatile market. The Bitcoin price went up and whales immediately turned to selling their coins. There was a lot of money up for grabs as the price grew $5000 in two days. However, because vast amounts of Bitcoin were being sold, the price dropped right away. In a couple of hours, the price was lower by 6%.

Experts suggest that long-term players won’t be selling their coins. They believe that the price has a potential of growing even further. That’s why we are expecting the price movement to stabilize in the next few days. At the moment, it looks like it will stabilize at around $15.000. If something new happens in the meantime, we will be here to share the info. To learn more about Bitcoin, check our Bitcoin Dictionary section.