We hate to say we told you so. In yesterday’s Market Watch we were discussing the possibility of a Bitcoin correction due to take place sometime soon. And it looks like soon is now.
Bitcoin had been on a charge for 36 days – according to the Relative Strength Index – and many were nervously awaiting the moment Bitcoin’s luck would change. Well that day is today. Just 24 hours earlier Bitcoin had been flirting with $19,500 but soon after midday yesterday Bitcoin’s price began trickling down.
Then at 3:30 UTC, it fell off a cliff, losing $500 in a matter of minutes. In three hours it had lost $1,000. What happened? A few things. The first was an uptick in activity to exchanges. Several whales – those holding more than 10,000BTC – appeared to be moving sizeable amounts of currency onto exchanges.
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.
— Ki Young Ju 주기영 (@ki_young_ju) November 26, 2020
Historically, such movements tended to be a signal that were about to exit their positions. Indeed, the chart supplied by Ki Young Ju, the CEO of on-chain analytics firm Crypto Quant shows inflows peaking just as the plunge began.
Others have suggested the re-opening of beleaguered exchange OKEx, which holds some $13 billion worth of Bitcoin, was partly to blame. However, the exchange wasn’t due open for another five hours, so there’s less of a strong signal there, but it could signal further losses later today.
And others put it down to the natural order of things.
This sell off was expected. Shouldn’t drop below $16,000 and so you can expect some healthy sideways trading for the coming weeks. $20k requires a lot of consolidation to get enough momentum to maintain a break above. https://t.co/9DuMyZTl27
— Vinny Lingham (@VinnyLingham) November 26, 2020
Regardless, if you were buying at the top of the market, your Bitcoin holdings are worth 7.8% less than they did yesterday. If you’d been buying Ethereum, you’d be 13.5% poorer. In fact, all of the top 20 cryptocurrencies by market cap have turned red, with XRP taking 20% losses – but is still up 80% for the week.
All in all, it was a bruising day for crypto-watchers, just as America was getting ready for Thanksgiving. Bah Humbug.
Nasdaq breaks records thanks to Tesla
Over on Wall Street, while yesterday was the Dow Jones Industrial Average’s record-breaking day, overnight the Nasdaq responded with a rally of its own.
Tesla led the charge, taking it to record highs in early trading. Its market capitalisation is now north of $500 billion. That valuation puts Elon Musk’s electric car company inside the top 10 most valuable companies, according to Asset Dash. Fun fact, Bitcoin slipped three places after yesterday’s market plunge.
The Dow pulled back from its record day yesterday as investors moved money away from companies still being battered by COVID and back into the relative safety of Nasdaq’s tech stocks.
This was reflected in a forecast from Goldman Sachs that said it had downgraded America’s Q4 and Q1 2021 forecasts as the country continues to see record-breaking numbers of new cases.
American markets are closed today for Thanksgiving, which will be a relief for some and frustrating for others keen for this market wave to never end.