Bitcoin price falls to USD 8,700 – 3 reasons for the bear market

  • Analyst Jacob Canfield sees three reasons why the Bitcoin and crypto market is currently in a bearish scenario.
  • From a historical perspective, short-term, significant price declines before and after the Halving are not unusual and have not changed anything about it as a bullish event.

The hoped-for “weekend rally” has failed to materialize this week. Instead, the bears continue to gain the upper hand in the last 24 hours. After the Bitcoin price bounced off the support of 8,400 USD on March 1st and subsequently climbed to over 9,100 USD on Friday, it has now fallen back to 8,759 USD (-4.0%) at the time of writing (07:30 UTC).

The altcoins are following the trend of Bitcoin and are recording significant losses. In particular, the biggest winners of the last few days are recording very strong price declines: Tezos (XTZ) is down 11.1%, Chainlink (LINK) is falling by 9.1% and Cardano is seeing a decline of 7.4%. Other altcoins such as Ethereum (-5.5 %), XRP (-4.5 %) and Litecoin (-7.1 %) also show significant price drops. The total market capitalization has fallen from around USD 261 billion to USD 251 billion since the beginning of the weekend.

Reasons for the Bitcoin price drop

A prominent analyst, Jacob Canfield, has identified three possible reasons why the crypto market is currently in a bearish state. According to Canfield, the coronavirus, the miners who are currently accumulating Bitcoin and the PlusToken scam are responsible for the current market sentiment.

The coronavirus has been considered by numerous analysts for several weeks now as the main reason why the global stock market and the crypto market are in a downward trend. The latter experienced one of the biggest price drops in recent years in the past weeks. Although Bitcoin was long considered a safe haven, similar to Gold, this narrative has been challenged by the past few weeks.

As a second reason, Canfield cites the fact that Bitcoin miners are currently selling very little of the Bitcoin they mine. They are hoarding their BTC in anticipation of an upward trend due to the Bitcoin Halving. As ByteTree’s Charlie Morris noted, returns have been strong when the miners have sold more than they mined. In contrast, Bitcoin performed poorly when the miners sold less than they mined. This is currently the case.

The third reason is the PlusToken Scam, which became active again yesterday. As CNF reported, Blockchain analysts have discovered that the PlusToken scammers have sent 13,000 Bitcoin (BTC) to a mixer. Although the transaction does not mean that the BTC will be dumped on the market, there are concerns among many investors that the sale could negatively impact the price of BTC.

When will the Bitcoin Halving effect become apparent?

From a historical perspective, the Bitcoin Halving is an extremely bullish event. The first two Halvings saw the Bitcoin price record huge gains while benefiting from the shortage of Bitcoin supply. Whether the third Halving in May of this year will again result in massive price gains is, however, controversial among analysts.

Many investors are wondering why the Bitcoin price, although the Halving is only about two months away, still shows no sustained upward trend. Jacob Canfield has also shared a very interesting chart on this. As the analyst shows with the following chart, the first two Halvings also had phases, both before and after, in which the Bitcoin price fell, at times quite significantly. However, this didn’t change the fact that the Halving is bullish in the long term.

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About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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