It was somewhat inevitable that bitcoin will eventually retrace after it skyrocketed by more than $25,000 in about a week to tap a fresh all-time high of $93,800 on Wednesday.
Here are some of the potential reasons why the asset tumbled from $92,000 on Thursday to under $87,000 on Friday morning.
Miners, Whales Selling
The first most probable reason is actually two-fold and is related to sell-offs by some of the most important pieces of the BTC puzzle. Data from Lookonchain shows that whales have deposited large amounts of bitcoin to centralized exchanges in the past few days, likely to realize some profits after the mindblowing rally propelled by Donald Trump’s victory in the 24 US presidential elections.
A whale deposited 1,920 $BTC($169M) to #Binance 1 hour ago.
The whale has deposited a total of 4,060 $BTC($361M) to #Binance in the past 3 days.https://t.co/8D2y9MbfFn pic.twitter.com/6NlWDPKoVx
— Lookonchain (@lookonchain) November 15, 2024
The second part of the sales reasoning comes from miners. CryptoPotato reported earlier this week that some miners had started to dispose of their BTC but it wasn’t all that worysome at the time. However, more recent data from CryptoQuant indicated that they have continued to do so.
In fact, even a Satoshi-era miner started moving bitcoins mined nearly 15 years ago, with some of them sent to exchanges for possibly the same reason as the whale above.
Miners continue to sell.
This time a miner from the Satoshi era moved 2K Bitcoin.The coins were mined in 2010 and had never moved.
Some of these Bitcoin ended up on exchanges. pic.twitter.com/I1Tlnq4FoY— Julio Moreno (@jjcmoreno) November 15, 2024
ETF Outflows
After it became known that Trump will be the next US president, investors started pouring substantial amounts into the spot Bitcoin ETFs. Almost $5 billion entered the funds within just six trading days. However, the high volumes suggested that BTC’s price might have reached its local top, at least according to historical performances.
The trend reversed yesterday. Farside’s database shows that just over $400 million was withdrawn from the US-based ETFs, which is actually the third biggest net outflow day since the funds’ inception in January.
The first spot in this adverse stat belongs to May 1, with $563.7 million withdrawn. Second place goes to the day before the elections – November 4, with $541.1 million. Interestingly, both these dates turned out to be local price bottoms for BTC as the asset skyrocketed in the following weeks.
That concludes the second (full) reason. The third is a combination of several factors, which indicated that BTC had become overbought, including the RSI, MVRV, and the growing FOMO levels.
Despite being 17% up on the week still, BTC remains away from its $100,000 target and the community hopes that things will be different this time, compared to the laser eye movement from 2021.
The post 3 Reasons Why Bitcoin (BTC) Dumped by $4K Daily, But the Worst Could Be Over appeared first on CryptoPotato.