On August 28, bitcoin price slumped by 7% from $10,200 to $9,500 in a few minutes on most crypto exchanges. Other crypto assets followed, with some shedding up to 10%. At press time, the king coin is trading at $9,494.16, marking a 6.63% fall on the day according to CoinGecko.
The rest of the crypto market is also still in deep red. Particularly, Binance Coin (BNB), Monero (XMR) and Tron (TRX) have plunged by 11.86%, 11.28%, and 11.81 % respectively.
Making Sense Of The Slump: Low Trading Volumes And CME Bitcoin Futures Friday Expiration Responsible For Plunge
Most analysts are attributing this drop to the imminent expiration of the CME BTC futures on Friday 30 which have a history of causing a price decline in the bitcoin market.
Dave Balter, founder, and CEO of Flipside Crypto Inc. expressed:
“From our end, it looks like it was a sell-off to cash settle futures that are coming due on Friday for BTC.”
Chief Investment Officer at Arca, Jeff Dorman shared the same sentiment adding that low trading volumes might have also caused the drop. He commented:
“It’s the week before Labor Day. Half of crypto is at Burning Man and the other half is sitting on their hands doing nothing. Volumes are low and it takes very little to move markets right now, and you have big futures/options expirations coming up at the end of the week.
The only definitive thing I can point to is that the move was led by declines in EOS, ETH, XRP, BCH, LTC and other large cap tokens that have been out of favor for months. I just don’t think there are a lot of investors willing to defend price right now.”
Bitcoin Is Consolidating As Institutional Investors Get Organized
Mike Novogratz, CEO of cryptocurrency merchant bank Galaxy Digital Holdings Ltd believes the recent pullback is no cause for alarm. According to him, BTC has outperformed all other crypto assets and is also up from its lows at the beginning of the year by close to 200%. He told Bloomberg Television:
“It has had a huge run, and so I think this is a bit of consolidation.”
Mike also believes institutions are readying to enter bitcoin market and this will bolster the next bull run but it will take some time.
“The institutions that are making longer-term decisions are making sure they’ve got custody, making sure their ducks are lined up, and they’re slowly and steadily moving in. What 2017 did, that crazy bull market, is it got people unrealistic expectations on how fast blockchain revolution, the crypto revolution is actually going to happen. You gotta give them some more runway before we give them a thumbs up or thumbs down.”
Peter Schiff, CEO of Euro Pacific Capital
The long-time bitcoin detractor did not pass up the chance to troll bitcoin’s recent dip, saying the king crypto does not make the cut as a safe haven. He stated:
“Bitcoin has again failed the safe haven test. On Friday, as escalating trade tensions sent global stock markets plunging, investors sought refuge in monetary safe havens. The Japanese yen, Swiss franc, and especially gold all moved higher. Yet Bitcoin plunged by more than stocks!”
What’s Next For Bitcoin (BTC)?
According to Josh Rager, crypto trader, and analyst, Bitcoin should stay above $9,533 on its Sunday weekly close to prevent any further downswings. He said:
“$BTC is going for its 3rd down week in a row. Last uptrend Bitcoin has multiple months with at least 3 down weeks in a row. Price is near weekly support & on weekly perspective, I want to see BTC close above $9533 Sunday or it would form a lower-low.
Monthly chart looks ugly too.”
Crypto analyst WelsonTrader shares the same sentiments as Josh. He noted a trend line that BTC needs to hold to prevent slumping to the $8k zone.
“Bulls have 1 chance to bring #Bitcoin above 10k, and if it bounces from this green support line. I’ve known for weeks that it would re-test this line, and I’ve posted about it before!”
On a more positive note, PlanB suggested that the current scenario bears some semblance to mid-2016 when the bulls gained steam shortly afterward to push the price to $20,000, BTC’s ATH.
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