Bitcoin (BTC) rose to $ 15,840 and then down to $ 14,800. Just five hours after hitting an intraday high, the dominant cryptocurrency is down by more than 6%. It’s likely that this massive increase in volatility is caused by three main factors.

The three catalysts for the sharp decline were the dollar’s recovery, the drop in gold prices when Pfizer announced that its COVID-19 vaccine tests had been positive, and the price of BTC whales plummeted.

Precious metals and Bitcoin declined at the same time
According to the Associated Press, Pfizer has announced that its third round of vaccine trials are progressing well. The pharmaceutical giant said the vaccine has now proven to be 90% effective in preventing COVID-19.

To date, Pfizer has tested the vaccine with 44,000 participants, and if it proves effective, the next step for the FDA will be to conduct its own studies before approving the vaccine for mass production and distribution.

After the poll was announced, the Dow Jones Industrial Average rose 1,000 points, sending the US stock market skyrocketing. When the US dollar and stocks dominated, he took in both Bitcoin and gold.

Mikael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, pointed to the recovery in the US dollar index and suggested that value alternative trades like gold and bitcoin were valued against the dollar. Thus, when the dollar recovers, the bitcoin price may fall along with the precious metals.

Van de Pope explained:

“It looks like we’re here, too. DXY is bouncing due to more confidence at the moment, causing assets like #bitcoin, gold and silver to drop dramatically. Correcting BTC in dollars would be a huge opportunity and overall a great opportunity.”
Whales have started selling Bitcoin aggressively
When the fall happened, CryptoQuant, a market analysis firm, discovered that the whales were selling bitcoins.

Traders, such as the investor under the pseudonym “Byzantine General”, found a similar pattern. With Bitcoin dropping due to a whale-driven recession, retail investors were still hungry for BTC.

The whales had several compelling reasons to sell BTC for $ 15,800. First, this is the major resistance area just below the $ 16,000 level. According to technical analysts, if the $ 16,000 level is broken, BTC is likely to hit its all-time high.

When whales sell, the market often gets a strong reaction. It is unclear if the whales will start taking profit from their short positions and attempt to resume the uptrend. At this point, the pullback stopped and BTC recovered above $ 15,100, indicating a short-term uptrend reversal.

The long-term players are still going strong
Despite the high level of market volatility, cryptocurrency trader Cantering Clark assured that long-term investors will not be anxious. He said:

“This volatility is just quick money when playing BTC dollars as a higher beta than dumping gold with dollars on vaccine news. Players speaking on behalf of a long-term thesis on Bitcoin do not switch positions.”

The short term carries MVRV. Source: Glassnode
In addition to the factors mentioned above, analysts at Glassnode note that the current short-term activity of shareholders is similar to previous bullish trends. So if BTC returns strong from last fall, the chances of a continuation of the rally may increase. Glassnode said:

Short-lived #Bitcoin holder MVRV has maintained a positive relationship for the past six months – and has jumped off the neutral line again. Historically speaking, maintaining this level of support indicates a continuation of the beef market for $ BTC. “

Source: CoinTelegraph