What is the reason for ETH and BTC to fall?
Nigel The price of Bitcoin (BTC) dropped to sub-$10,000 across major exchanges again on Sep. 5, marking two consecutive days of testing the crucial level. Other major cryptocurrencies, including Ethereum’s Ether (ETH), fell by nearly 10%.
Three factors likely contributed to the abrupt drop of Bitcoin include miners, a strong dollar and whales taking profits.
Did whales take profit?
When the price of Bitcoin suddenly dropped by 5% to $9,975 on Binance, BitMEX liquidations were below $40 million. Typically, when a massive price movement occurs, it causes over $100 million worth of futures contracts to get wiped out.
The futures data suggests that the selling pressure came from the spot market. While possible, there is a low probability that retail investors began to dump aggressively at above $10,500.
Whales taking profit at $10,500, which has historically served as a multi-year resistance level for Bitcoin, is more likely.
But whales have been taking profit since Bitcoin achieved $12,000. As Coin telegraph previously reported, a whale sold at $12,000 after “HODLing” BTC for over two years.
Some miners potentially selling
Throughout the week, on-chain data provider Crypto Quant said that mining pools had been taking profits. Ki Young-Ju, the firm’s CEO, said:
“Miners send a certain amount of BTC to exchanges periodically, so they already have a large amount of BTC in the exchange. Whenever they decided to sell, it seems they move a relatively significant amount of BTCs to other wallets, and some of them are going to exchanges.”
The gradual sell-off of BTC by miners since mid-August could have built significant selling pressure on Bitcoin. However, Pooling vice president Alejandro De La Torre emphasized that it is challenging to accurately track miner outflows. He noted:
“I can reassure you that Crypto Quant does NOT know which wallets are owned by Pooling. perhaps it's a handful of (big) miners they are tracking... even still, many assumptions.”
A strong dollar, ETH weakness
A common theme throughout the past two weeks — as Bitcoin consolidated — was the strengthening of the U.S. dollar. The USD began to show signs of recovery after four months of downside while the euro began to slump.