Bitcoin Slumps to $ 31K on Sell-Off in the US and Europe

Bitcoin’s price took another shot Thursday morning, falling close to $ 31,000 since markets opened in Europe and the US. Investors rushed to take short-term profits, worrying when – or if – another wave of new buyers would be coming to market soon.

At press time, the price of bitcoin was $ 31,910.61, down 6.61% in the last 24 hours, according to CoinDesk 20. In the United States, at about 9:40 am ET (14:40 UTC), the price of bitcoin was as low as $ 31,006.59.

One indicator that shows the severity of US and European sales is the so-called “Coinbase premium,” the gap between the Coinbase BTC / USD pair and the BTC / USDT Binance pair that includes the stablecoin tether, at back South Korea’s CryptoQuant data chain site. The number dropped to as low as – $ 212.79 at 4:17 am ET (09:17 UTC) on Thursday.

Coinbase Premium
Source: CryptoQuant

“Coinbase naturally has to trade higher than Binance by, like, 20 basis points, I think, because of the small difference in lead prices,” Ki Young Ju, chief executive at CryptoQuant, told CoinDesk . “So if it’s actually trading at the same price or even lower, it would mean really, really bearish.”

Tether is the largest stablecoin in cryptocurrency. Trading close to – but not exactly – in line with the US dollar that is supposed to support it, tethering is the popular method for those on Binance and other Asian exchanges to get in and out of bitcoin.

Although the premium fell in deep red territory during Asian trading hours on Thursday, it does not mean that traders in the US were not involved in the latest correction.

“US traders have been trying to trade in anticipation of lower Asian sessions,” said John Todaro, director of institutional research at cryptocurrency analytics firm TradeBlock. “So depending on the times when this premium tightening took place during the day, it could be an indicator that the US is selling ahead of time.”

Several factors appear to have triggered the latest bitcoin sales: leverage de-leverage, especially in Asia; concerns that fewer buyers are entering the market; and uncertainty over policies on cryptocurrencies by the newly inaugurated President Joe Biden’s administration, according to analysts and traders.

“We saw some sales from organizations, but not significantly,” Chris Thomas, head of digital assets at Swissquote bank Geneva, told CoinDesk. “The spur was late Asian influencer jobs in Asia. They move the market a lot because of the leverage. ”

Data from coinalyze.net shows that there is a reasonable amount of leverage on large derivatives exchanges.
Source: coinalyze

On the technical side, traders said the market has cut the price increase since Dec. 11 and is looking at a new level of support in the $ 29,000-30,000 range.

Bitcoin CoinDesk Price Index
Source: CoinDesk 20

“The next level of support is the 61.8% Fibonnacci at $ 26,700,” Jean-Marc Bonnefous, a partner at investment firm Tellurian Capital, told CoinDesk. “That is, if the new investor allocations don’t come in as expected to buy the much-awaited dip.”

As the number of traditional investors and traders entering the bitcoin market has increased in recent months, the price movement has become more technical, according to Bonnefous. Before it was mainly affected by bitcoin supply and demand, he said.

Bitcoin’s price is below its 10-hour moving averages and 50 hours on the hourly chart, a shorter-term bearish signal for market technicians.

BTC / USD Bitstamp pair
(x)
Source: TradingView

A few organizations, including some hedge funds, could be using the uncertainty in the market as an excuse to take some profit, Todaro added. Many of these traditional financial players in the US and Europe came to market before the steeper share of running bitcoin and are therefore more likely to be at higher profit levels given current prices.

But some potential investors may be stunned by not knowing what the Biden Administration is going to do with regards to bitcoin and cryptocurrencies.

“Given the timing of the sale and the isolation [of that selling] for US companies, like Coinbase, this could also indicate geopolitical aspects as well as the Biden Administration coming in the past few days, ”said Todaro. “Biden’s [nominated Treasury Secretary Janet] Yellen has put forward a potential ‘unrealized tax’ proposal, which would affect cryptocurrency investors – and investors in any asset really – and potentially lead to some sales. “

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