Here are three reasons why Bitcoin price tumbled nearly 10%, falling below $11,000 for the first time in a month

By Selena On Sep 4, 2020

At press time, Bitcoin price has dropped almost 10% over the past 24 hours, trading around $ 10,319. This drop has caused many traders to suffer heavy losses and headaches to find the reason. Maybe the three reasons below will help you feel why the market is competing to sell off Bitcoin like that!

# 1: Bitcoin price and traditional market are on the same page

The Standard & Poor’s 500 index of major US stocks corrected on Thursday after climbing to a new record high earlier this week.

Meanwhile, the number of newly unemployed in the United States stands at more than 881,000 – the lowest level since the COVID-19 pandemic occurred earlier this year. This 881,000 is still higher than 665,000 – the number that marked the last peak of the recession in early 2009. The labor market continues to struggle and shows no improvement despite the COVID- 19 fell in August.

John Todaro, institutional research director at crypto analysis firm TradeBlock, said:

“There could be an overlap between equity sellers and digital currency sellers. The largest equity market declines this morning are tech stocks, including retail trading darlings, Tesla, and the FAANG names. It is unclear if this will push into a continued broader crash in equity markets, which could put more pressure on digital currencies, or if it is just a short-term correction.”

# 2: Miners no longer store Bitcoin

Based on blockchain data, the move to move Bitcoin to exchange wallets is increasing. And this is the main reason for the increasing selling pressure. According to Blockchain data analysis firm CryptoQuant, the large Bitcoin mining pools have seen an increase in the amount of BTC being moved out – ostensibly to be sold by exchanges.

Ki-Young Yu, the founder of CryptoQuant, shared:

“Miners are profitable traders. I think they are just looking for selling opportunities, not capitulation. I think it’s going to be the war of miners between those who want a bitcoin price rally and those who don’t. Some Chinese miners already realize their mining profitability (ROI), and they might not want new mining competitors joining the industry because of the bull market. ”

# 3: Bitcoin price was pulled down due to DeFi being removed

Recently, DeFi is one of the strongest growth markets, mainly taking place on the Ethereum Blockchain. However, this has absolutely nothing to do with ETH price. The proof is that ETH is still down almost 13% over the past 24 hours, trading around $ 389.

Those price cuts, however, followed gains of 54% in July and 25% in August as reports of eye-catching dollars are flowing into DeFi – especially with new projects coming out. Recent eyes like Compound, Yearn.Finance and SushiSwap.

The total value locked in DeFi more than doubled in August to $ 9.5 billion, but over the past few days, that amount has dropped to $ 9.1 billion.

Denis Vinokourov, head of research at crypto broker BeQuant, shared:

“The explosive growth that decentralized exchanges (DEXs) and all things DeFi has finally reached levels that begin to impact on the sentiment across its centralized exchange (CEX) counterparts, with the sell-off triggered by a combination of stratospheric Ethereum fees. Also, an aggressive unwind of the very crowded trade across Uniswap token related positions in the wake of several tokens, namely PIZZA and HOTDOG, dramatically collapsed from $ 6,000 to $ 1 in a mere few hours. This is likely because the same assets (bitcoin, ether, and others) are used aggressively to structure collateralized positions. Similarly to another DeFi heartthrob SushiSwap, these offerings were also Uniswap clones.”

Finally, he concluded:

“DEX and DeFi trading is no longer a hobbyist activity, and several firms that dominated CEX space have recently ventured out into DeFi to generate alpha. As such, the Chinese wall that once separated markets are no longer in place and sentiment from one market will flow into another, and vice versa.”

You can see the BTC price here.

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