Black Wednesday. The Reasons Bitcoin Drops

On the evening of Wednesday, November 14, the cryptocurrency market collapsed by more than 15%. The bitcoin exchange rate fell to $ 5.500 and on some exchanges even more, and updated the annual minimum. Almost all other cryptocurrencies followed the leader, in turn losing up to 20%.

The reasons for what is happening at the moment are still unknown, but there are already several versions of what happened.

• Chaos surrounding Bitcoin Cash: as the Bitcoin Cash (BCH) network prepares for a hard fork, which would entail a hostile attempt at a takeover through a 51% attack, the markets started to react with negativity.
• Miners giving up: Bitcoin mining is a thin-margin game. BTC prices above $5.800 are the absolute minimum. Miners face high difficulty and may start to unwind their operations. Selling is essential for miners, especially when it comes to covering operating costs.
• Trader Exodus to USDT: The latest data from CryptoCompare show that the BTC/USDT pair took up more than 62% of all trading, showing an attempt to leave BTC for a stable-priced coin. In the past couple of weeks, USDT trading was relatively subdued, taking up just 44% of volumes.
• Bitmex speculation: Bitmex prices have fallen as low as $6.088, based on derivative activity. The price shows the sentiment for BTC is still bearish, allowing speculation to spill over on other markets.
• Lower bottom expectations: There are still beliefs the bear market has not seen more selling and capitulation, which could pressure BTC as low as $4.000. The stagnant prices of the past month may not be the bottom for BTC, hence the reluctance to bet on a price increase happening soon.

The latest version looks the most likely, as recently there has been a drop in the dollar of all assets, including precious metals. In addition, November 13 witnessed both the largest recent drop in oil prices and market correction.

This pushed the dollar up, and the breakthrough of the consolidation formed several months activated traders to the beginning of mass sales. The next few days will show whether the price of BTC will be fixed in a low range or will be followed by a quick rollback up.

To see what currencies are the best to invest at times like this, we highly recommend reading our arctile “Small-Cap Altcoins pitfalls”