Learn one of the reasons why Bitcoin dropped to the $21,000 level
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Answer Learn one of the reasons why Bitcoin dropped to the $21,000 level
According to data shared by on-chain analyst Willy Wu, Bitcoin’s drop to $21,000 is mostly due to selling by institutional traders via 3AC, but there is some positivity.
According to analyst Willy Wu, these sell-offs were correlated with a negative net inflow of cryptocurrencies into exchanges, which may indicate that the majority of market participants had entered an accumulation mode and were actively buying cheap coins to store in their cold wallets while prices were falling.
Read:Korean authorities freeze $39 million in cryptocurrency linked to Do Kwon
At the beginning of this summer, we did not see inflows from centralized platforms, as traders were mostly providing additional liquidity to fund their short positions while not actively buying any coins at their absolute lows.
Regardless of the positivity about the net inflow of bitcoin into exchanges, the current move to $21,000 is a manifestation of the problems surrounding the cryptocurrency market caused by the negative macro environment for risk-exposed assets like bitcoin or ethereum.
Unfortunately, it is not yet clear whether the downtrend will continue as there are no signs of Bitcoin bottoming.
Also one of the main reasons for the decline of Bitcoin in addition to the selling carried out by institutions is the rise in the DXY dollar index.
As the rise of the US dollar against the FX bracket is one of the main sources of pressure on the digital asset market.
With a successful bounce off the 50-day moving average, DXY reached new highs after a recent correction that launched a rally in the stock and digital asset markets.
Looking at the inverse correlation between the assets, it becomes clear that with the current price-raising cycles, a recovery in the cryptocurrency market is unlikely, at least for the time being.
Read:Positive sentiment jumps crypto derivatives trading volume to $3.12 trillion
Analyst Willie Wu predicts that the crypto market may enter a long-term winter as we saw in 2018.
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