Bitcoin Price Plummets Suddenly for 3 Reasons, and It Could Be the Beginning of a Bigger Drop
Just yesterday, I announced that I saw the Bitcoin price end the week at $20K. The Bitcoin price had just hit an annual high of $19,390. All the lights were green, and despite the imminent correction, I thought that the current rally still had enough to take Bitcoin to a new All-Time High (ATH).
At the time of writing, I have to admit that I was wrong.
The Bitcoin price is $17,386, and a low at $16,532 was hit this morning:
Within a few hours, the Bitcoin price dropped -14%, before a first rebound, which could continue to $18K in the coming hours.
In my defense, I must say that there is one event that I did not foresee yesterday when I wrote my analysis.
Brian Armstrong triggers a FUD feeling around Bitcoin
I couldn’t foresee that Brian Armstrong, the CEO of Coinbase, would publish a tweet that would create a true FUD (Fear, Uncertainty, and Doubt) feeling:
Brian Armstrong went even further, as he published several tweets to detail all this in the wake.
His series of tweets explains that Coinbase heard rumors last week that U.S. Treasury Secretary Steve Mnuchin was planning to quickly implement much stronger regulation on self-hosted crypto wallets.
The goal would be to have this regulation in place before the end of Donald Trump’s term of office on January 20, 2021.
If you are not used to certain terms from the world of Bitcoin and cryptocurrencies, self-hosted crypto wallets, which are often called non-custodial wallets or self-custody wallets, allow you to store your Bitcoins individually.
Your hardware wallet or your favorite wallet application fits into this classification.
Concretely, this concerns everything that allows you to have in your possession the private keys associated with your Bitcoins rather than leaving them on third party financial institutions.
This has naturally triggered a lot of concern, and the Bitcoin price has reacted strongly to the decline. Again, I would like to remind you that these are just rumors heard by people at Coinbase. Nothing concrete or any statement of intent at this time.
Brian Armstrong’s attitude seems to me to be rather light to spread such rumors.
Many preferred to take profits from the rally that we have just experienced
From this news, many must have thought that it was time to take profits from the Bitcoin rally that we have known since the beginning of October 2020. The Bitcoin price had risen +80% over this period, and 99.9% of Bitcoin HODLers were in profit.
Greed had been at an extreme level for several days as I mentioned in my article where I talked about Bitcoin entering a “Sell High” phase.
Under these conditions, some sold some Bitcoins to take profits. This is a logical thing that happens frequently.
In the wake of this, the inflow of BTC on the decentralized exchange platforms began to increase. Whales and high-net-worth investors started selling Bitcoin massively on the major exchanges.
Several leverage effects on exchanges accelerated the fall of the Bitcoin price
This selling pressure accelerated the fall of the Bitcoin price through leverage with many long selling positions. Data shows, for example, the liquidation of more than $425 million between a few hours on Binance.
Currently, a rebound to $18K seems to be the most possible as the Bitcoin price has risen to $17.3K. The $18K could be tested, and a rejection could mean a lower fall, then probably the beginning of the big correction that many have been waiting for the past few days.
Some were even calling for this correction to purge the Bitcoin market of all the speculators who don’t believe in Bitcoin and who just arrived for opportunism.
If the downtrend were confirmed, we could very well see Bitcoin fall much lower since the next major support area is at $13.7K.
What is going to happen in the next few hours and days is a good opportunity to accumulate more Bitcoins if you fundamentally believe in Bitcoin as I do. It’s up to you to see if you have that level of confidence in Bitcoin.
For those who do, it will be an opportunity to accelerate the conquest to own 1 BTC.