Bitcoin’s price fell as much as 10% during Tuesday’s early trading hours when Bitcoin miners sold a large chunk of the cryptocurrency for the first time since October. There is not enough demand to accommodate the additional coins in the market as the institutes want to have an idea of how the new Biden administration will view Bitcoin and other cryptocurrencies.
At press time, Bitcoin was trading at $ 32,254.59, according to CoinDesk’s BPI, down 3.04% over the past 24 hours. The price fell to nearly $ 30,000 after US markets opened on Tuesday.
The Bitcoin Miners Position Index, a ratio of the number of bitcoin amounts exiting all miners’ wallets to the one-year moving average of that number, hit an eight-year high last week and is still above 2.0, according to the on-chain analytics firm CryptoQuant. Any value above 2.0 indicates that most miners are selling.
Miners appear to have sold to cover part of their running costs.
“For the first time in a while, miners seem to have sold some pretty sizeable holdings to raise funds, as we expected at a post-October rally,” Neil Van Huis, director of sales and institutional trading at Blockfills, told CoinDesk . “With the need to allocate more (and newer) mining equipment capital, the best scenario was to take Bitcoin off the balance sheet at three or four times higher prices 30-60 days after the rainy season ended in China [miners] could have asked. “
Not enough buyers
While miners continue to sell Bitcoin, there doesn’t seem to be enough buyers, particularly from institutional investors, to hit the sell side.
The “Coinbase premium”, the gap between Coinbase’s BTC / USD pair and Binance’s BTC / USDT pair, in which the Tether Stablecoin is involved, has not been strong after the negative last week, according to CryptoQuant or consistent numbers shown above $ 50.
When that metric is above $ 50, it usually indicates stronger buying pressure from Coinbase, CryptoQuant chief executive Ki Young Ju told CoinDesk. And when there are no USD spot inflows, the premium goes down.
Read more: Bitcoin drops to $ 31,000 in US and Europe sell-off
In the meantime, all the stablecoins reserved on all exchanges reached a new all-time high in the CryptoQuant tracker. Combined with the spot inflows in US dollars, this means that the current market is primarily being driven by crypto natives like crypto hedge funds and market makers. Such market participants are more comfortable buying and selling bitcoin with stablecoins, Ki said.
“If there is no spot USD inflow, there will be no bulls running,” added Ki.
Institutions wait and see
Institutions are pressing the pause button on their Bitcoin purchases, also because many are trying to understand the attitude of the new Biden administration towards crypto-related guidelines and regulations. Negative comments from new Treasury Secretary Janet Yellen on cryptocurrencies have raised some concerns about possible additional controls on crypto markets.
Read More: Bitcoin Sells On Bearish Sentiment, Yellen Worries
Institutions are still trying to judge where this government is on crypto and if it’s not too negative, which means lifting the fear of aggressive regulations or bans, then I think we would see a new wave of crypto Institutions are coming into the room, ”Guy Hirsch, US managing director for multi-asset brokerage eToro, told CoinDesk.
The fear of Wall Street beats the Redditors
Some retailers hope GameStop Corp.’s volatile stock rally not repeated with Bitcoin this week. In the case of GameStop, “a group of Redditors and Discord users squeezed the life out of their GameStop shorts by quadrupling stock prices,” said Adam James, executive editor at OKEx Insights, the research arm of Crypto Exchange OKEx.
He added, “The realization that the old markets may not be what they used to be in the new home-stay paradigm [could] Have implications for the bitcoin and cryptocurrency markets, although I wouldn’t exactly say they are bearish for the cryptocurrency markets. “
Even so, some traders and analysts have remained positive in the markets despite the short-term market volatility.
“Because Bitcoin cannot be reclaimed [previous] Cheers, some are losing trust, ”explains Bendik Norheim Schei, Head of Research at Norwegian Cryptocurrency Analysis Arcane researchsaid CoinDesk. “You will probably regret that later this year. Bitcoin is volatile, that’s part of the game with a new and emerging asset. “
Chris Thomas, Head of Digital Asset at Swissquote, told CoinDesk that his company had a support level of around $ 30,000, a level that was previously “decently” supported by buyers.
“It doesn’t make sense for sellers who aren’t very speculative to sell at this level,” said Thomas.