As we all know by now, bitcoin is not in its greatest state. The currency continues to delve deeper into oblivion, now trading at roughly $9,900 at the time of writing despite moving beyond the $12,000 line just over a week ago.
Bitcoin Is Headed for a Dark Place
However, according to several sources, there were red flags appearing all over the crypto space during these past few weeks, and bitcoin has long been at risk of heading towards an extremely low position on the financial ladder. According to the Weekly Jab Newsletter:
A quantitative risk indicator known for spotting price reversals reached overbought levels on August 21, suggesting caution despite the bullish trend.
In addition, things have been relatively shaky with bitcoin futures as of late, with firms such as BitMex “boasting” an open bitcoin interest rate of roughly 800 million. This was the same level it was at roughly two weeks ago – another period in which bitcoin saw its price sink lower.
It appears there’s a lot of selling activity throughout the space as of late. It’s likely that bitcoin, in reaching $12,000, inspired a lot of people to sell their stashes or at least part of their stashes, which could be what prompted the sudden drop into the $9,000 range.
This has been a serious problem meandering throughout the crypto space for years. When bitcoin rises, you’re supposed to wait and let it rise even more. You don’t sell the minute you gain a few dollars. This is no way to invest, and more than that, it puts the entire digital space at risk.
An analyst at Crypto Quant explained in an interview:
Miners were moving unusually large amounts of BTC since yesterday… taking bitcoin out of their mining wallets and sending it to exchanges.
While the circumstances surrounding bitcoin look rather grim at the time of writing, not everyone believes this is a sign of negative things to come. Some are even claiming that the price drop is necessary for bitcoin to remain strong in the coming months.
Maybe This Isn’t Such a Terrible Thing
An anonymous analyst at Rekt Capital recently stated:
Bitcoin confirmed a macro bull market the moment it broke its weekly trend line… That said, however, price corrections in bull markets are a natural part of any healthy growth cycle and are a necessity for price to later reach higher levels… Bitcoin could retrace as far as $8,500 while maintaining its macro bullish momentum. A revisit of this level would constitute a ‘retest attempt’ whereby a previous level of sell-side pressure turns into a new level of buy-side interest… Another way to think about this retrace is through the lens of the bitcoin halving. After each halving, price consolidates in a ‘re-accumulation’ range before breaking out of that range towards the upside, but later retraces towards the top of the range for a ‘retest attempt.’