Bitcoin Halving Impact Fades as Demand Takes Center Stage
According to reports, the Open Interest in Bitcoin is now 30 times higher than it was 11 days before the 2020 Bitcoin halving.
Bitcoin price has got its anticipated pullback, dropping over $1,000 USD in price before it could touch its recorded all-time high value.
As the market gained closer to the $20,000 USD mark, Bitcoin price experienced a wave of major volatility dropping at around 5% in trading value. This occurred just after almost hitting a resistance level of $19,500 USD.
Why did Bitcoin price drop?
It seems as though the large-volume investors depositing BTC to exchanges could be the reason for the sudden decline. As founder of on-chain analytics resource CryptoQuant Ki Young Ju noted:
All Exchanges Inflow Mean increased a few hours ago.
It indicates that whales, relatively speaking, deposited $BTC to exchanges.
But long-term on-chain indicators say the buying pressure prevails. I still think we can break 20k in a few days.
Chart 👉 https://t.co/mL1j2ZqVf8 pic.twitter.com/6ErmJHrS4v
— Ki Young Ju 주기영 (@ki_young_ju) November 26, 2020
Bitcoin price drop not necessarily bad news
While it seems like a bearish decline, it’s not necessarily bad for the overall health of the market. A pullback has been anticipated by Bitcoin experts and analysts for some time. The market is possibly experiencing a short term sell-off as new investors sell Bitcoin for higher profits. With the recent surge as a cumulative result of FOMO, new investors, and fresh institutional interest, it is also possible that Bitcoin won’t fall back to lower price levels.
Not all analysts believe that the token’s decline is at an end, however. Tone Vays, financial analyst and derivative trader, foresees Bitcoin falling down to around $14,000 USD before it peaks again.
I am looking for a pullback to 14k
— Tone Vays (#EndLockdowns) (@ToneVays) November 24, 2020
There are differences between this correction and the bearish winter of 2018. Mainly, the rising interest from institutional investors and the wider spread attention to the cryptocurrency market. With firms like Grayscale buying significant portions of Bitcoin and PayPal offering wider chances of adoption, Bitcoin’s chances of recovery remain higher than before.