The crypto market has slumped $13 billion in the past 24hrs, leaving a vast majority of digital assets deep in the red, including Bitcoin price. Here are 3 things holding it back right now.
Over the course of today and yesterday, anyone with bitcoin probably noticed that the value of their coins dropped quite substantially– over 5.26% to be exact.
The Bitcoin price correction has left the asset trading around $8,500. The question plaguing the community now is will this price rise back to Marches’ resistance level of $9,200?
After a healthy correction, the answer to this would be ‘probably’. However, concerns are rising that a handful of catalysts are currently turning this event from a harmless pullback into a malignant crash.
Plus Token Scam Dumping
As reported by Bitcoinst recently, at least 11,999 Bitcoins started moving from the PlusToken scam into unknown addresses — with a total value of over $107,000,000. The splitting of this amount means that it’s easier to mix. Splitting the fraudulent Bitcoin may be a sign that they’re preparing for massive sell-orders, which will hinder Bitcoin’s price recovery.
Even if the dumping doesn’t occur, it’s likely that the very fact it’s on move is causing some wary traders to exit into more stable-valued assets.
Coronavirus is infecting Bitcoin price
This is a controversial one because many analysts have suggested in the past that coronavirus would help bitcoin price rise since the leading asset is supposedly used by funds to hedge against traditional finance risk.
Yet, there are now concerns that Bitcoin’s recent drop and bearishness was strongly correlated with the coronavirus.
Coronavirus may have affected Bitcoin in ways the community wouldn’t have predicted. Some people in the community are suggesting that the impact of coronavirus on crypto events, and mining facilities could have something to do with it.
70% of the Bitcoin miming Pools in China?
Corona Virus Just Killed Your Bitcoin & it's coming for another big bite in the Bitcoin price in March. pic.twitter.com/HJV5yJcxB2
— Cosmic Lover ~ aka Purple 🌎🌤♥✨🥀🌼 (@CosmicLover10) February 27, 2020
This is still a hugely speculative conjecture though, as there’s not a lot of evidence that mining closure is correlated with a drop in Bitcoin demand.
In reality, it’s not certain how mining closures will affect interest in Bitcoin. The protocol designed the difficulty of the mining process to alter every two weeks to adjust to the computing power available on the network, meaning that closures have a limited effect on processing speed.
Ideally, this would mean that the effect of coronavirus closing Chinese mining facilities will be offset naturally by the protocol.
However, there’s a strong case for coronavirus decreasing demand for cryptocurrency, as people begin dumping it for fiat money in order to prepare for a wider outbreak.
Ahead of the halving event in May, Bitcoin owners are more likely to hold onto their assets if they predict that the supply will decrease and demand increase.
This is the same case scenario for miners, who control a significant percentage of Bitcoin supply.
Optimism about the Bitcoin halving may explain the drop in trade volume which as suggested by analysts, is a sign that a precursor for a financial pullback. If this lack of trade volume persists, then recovery is made more unlikely keeping the network in a state of a pull-back.
Fortunately, if miner hoarding is the primary reason for the major pull-back, then there’s nothing for the community to worry about in the long-term. It shows that the trading behaviour which appears to be bearish could actually have underlying bullish beliefs that Bitcoin demand will increase after the mining event. In that case, the pull-back may only be temporary.
What do you think is the key thing holding back Bitcoin’s price right now? Add your thoughts below!
Images via Shutterstock, Twitter @CosmicLover10