Well, this was to be expected after a surge of 85% in the price of Bitcoin since October.
People got a Thanksgiving sale as the BTC price dumped nearly 17% to almost $16,300. Still, the last time we were at this level was just last week, so all good. The lowest we were in November was about $13,200.
Trading around $17,000, the ‘real’ trading volume continues to go up, reaching $6.68 billion.
It’s a Black Friday sale that will be a little extended.
See yah in the next ride in 3-4 weeks👍$BTC
— Cantering Clark (@CanteringClark) November 26, 2020
What else did you expect?
It has been glaringly obvious that Bitcoin is overextended as it kept on breaking above one level after another in quarter four of 2020.
In less than two months, from just above $10,000, we made a new 2020 high of $19,500 just yesterday. After such a wild run, it is to be expected the market would see some correction. Not to mention the leverage started “dangerously” creeping up this weekend.
As we have reported and market participants have been vocal about all this time has been the expectation for a pullback.
“Conditions are very massively overbought and bound for a correction,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore. “So I don’t think it’s unusual, frankly.”
Ayyar expects Bitcoin to stabilize and achieve all-time highs but warned that it would be followed by a larger drop in the cryptocurrency.
It’s Usual and Bullish as F
During the last bull run, the digital asset had an average of 30% drop about nine times.
By this standard, we only had half of the correction, another such drop, and we would be going under $15,000, which could give us another Black Friday sale.
Bitcoin trader @CryptoCobain called this a “very bullish dumping.”
It’s “not unusual to see a short-term pullback following periods of significant, accelerated gains as traders look to take profits before resetting once volatility subsides,” said Ryan Rabaglia, global head of trading at OSL brokerage in Hong Kong.
“Once the dust settles, we’re back to business as usual with all medium to long-term bullish indicators still in play,” he added.
You can Blame Some These Too
If you are still looking for a reason why this happened, an assortment of reasons could be blamed.
Just today, OKEx restored the full range of withdrawal services, reopening at 08:00 UTC.
Around the time of the fall in prices, Coinbase CEO forewarned the community on Twitter that the US Treasury Secretary is planning to “rush out some new regulation regarding self-hosted crypto wallets before the end of his term.” This led to the transfer of 1,008 BTC worth over $18.7 million to Binance.
“This tweetstorm made a difference for some market participants, and likely triggered selling flows, which against a backdrop of unsustainable high leverage (present since Monday) led to the largest 24h drop since March,” said trader and economist Alex Kruger.