Bitcoin has dipped below $50k but surprisingly unlike before, traders are not rushing in to buy up the dip.
Major Signals
- Bitcoin has undergone two major corrections lately.
- But there hasn't been the usual case of aggressive dip buying.
- Some think that options which are set to expire on Friday, have something to do with it.
- It could also be as a result of the hashrate decline.
The Crypto market has always been a space of such volatility. From one moment to the next, one is never completely sure of whether the market is bearish or bullish. But this month, it seems the market has been somewhat steady and has majorly been in an uptrend.
The recent previous correction on Sunday, 18th April had brought the bitcoin price from trading above $60,000 to trading at the $50,000 zone.A correction that was expected after its recent ATH, over $64k. But yesterday was another bloody day, bitcoin declined by over 23% to slide below the $50,000 for the first time since March.
But unlike other cryptocurrencies like Ethereum and BNB, BTC seems to be slow in filling up the dip this time around. The current downturn could perhaps be rooted in the 1,55 billion dollar option expiry scheduled for April 23. Bears have an upper hand of $340 million below $57,000, as Cointelegraph reported previously. This might also explain how pro traders have maintained a neutral position in the last eight days, despite the 18 percent drop.
Some analysts like Willy Woo, however, have stated that an aggressive decline in the hashrate in Bitcoin triggered the Chinese coal mining accident. This event, plus the electricity failure in the Xinjiang district in China, could have decreased the processing power of the Bitcoin network by as much as 19 per cent and highlighted its high dependence on coal-fired energy.
Even when critics decided to step in to Bitcoin, Nic Carter, the co-founder of Coin Metrics, has delivered a thorough denunciation of some of the major claims. Carter says that the comparably compact Bitcoin mining industry is largely focused in areas with electricity unutilized and low cost.
Furthermore, while the gold industry is detrimental to the environment and diesel-dependent, green energy is able to power Bitcoin mining fully. With exception of rare metals, the portability of Bitcoin miners enables the use of oil and gas resources that were previously wasted.
In any case, some of this may have resulted in the recent BTC price correction, and pro traders have not yet added positions.
Major crypto-monetary trades offer information on the long-to-short net positioning of their top traders. This indicator is calculated by analysis of the consolidated position of customers on site, at margin and in the future. It provides an easier understanding of the standing or bareishing of professional traders.
The methodology findings indicate an importance among different exchanges so that changes are monitored instead of absolute figures.
Conclusion
CME Futures are trading below the spot price, an indication that the market is bullish. The reverse is usually the case in a bullish market. This combined with some other factors like a negative Coinbase premium seems to be giving traders pause when it comes to trading Bitcoin.
Hopefully that would be reversed soon, maybe even now as the market picks up again and bitcoin trades close to $50,000.
Question of the day
What do you think is behind Bitcoin's decline? Let me know in the comments.
