Bitcoin (BTC) is down 7% in less than two hours, liquidating over $ 100 million in long positions on September 3rd. At BitMEX alone, the sudden drop wiped out nearly $ 99 million.
Three main factors are likely to drive the Bitcoin price down: mining outflows, the strength of the US dollar, and stiff resistance.
As reported earlier today, large mining pools have sent higher than usual amounts of BTC to stock exchanges in recent days.
The data showed that the miners were preparing to sell their bitcoin holdings, adding to the sales pressure in the markets. Ki Young-Joo, CEO of CryptoQuant writes:
Miners regularly send a certain amount of BTC to exchanges, so they already have a large amount of BTC on the exchange. When they do decide to sell, it appears that they are transferring a relatively large amount of BTC to other wallets, and some of them will. ”
Miners are one of two sources of external pressure from sellers in the bitcoin market other than stock exchanges. When miners start selling their assets, this can put a lot of pressure on Bitcoin.
The pool is in US dollars
Over the past three days, the US dollar has strengthened against other reserve currencies. The US dollar showed particularly strong results against the euro.
As reported by Cointelegraph, the European Central Bank (ECB) has warned that the Euro has become too expensive. The ECB warning shook the markets and led to a massive sell-off in the EUR as investors feared restrictions would be imposed.
When the dollar started rising from its multi-year support zone, both Bitcoin and gold fell sharply.
BTC developed strong resistance
The area between $ 12,000 and $ 12,500 has been a strong resistance area for Bitcoin since 2018.
BTC price tested the $ 12,000 resistance level for the fourth time in a relatively short period of time. This may have triggered a reaction from the sellers, which contributed to the withdrawal of Bitcoin.
But the price of Bitcoin fell to $ 10,625 on the major exchanges. Salsa Tequila, a trader known by pseudonyms, said that this is the most important level of support in higher timeframes, indicating the possibility of a recovery in the near future.
Where do traders see the Bitcoin trend?
In the short term, traders usually expect a rebound to $ 11,200. The decline from $ 11,200 will confirm this level as a strong resistance area, and the recovery will indicate the continuation of the uptrend.
Michael Van de Pope, a full-time trader on the Amsterdam Stock Exchange said:
“It was a breakdown and we went to the next level. It was a painful landing for me too, but I’m not going to cry in the corner. A help meeting is expected for $ 11,200, where everything will bounce off as well. However, $ 11,200 is a critical threshold.”
Cryptocurrency trader Scott Melker said the ideal scenario would be a slight pullback followed by a sustainable recovery. He said:
“The ideal BTC trade here would be to stop the decline, reset the RSI 4 hours after oversold, and another low showing that the RSI has made a higher low, then an absolute gap in the bullish oversold section.”