Bitcoin price retracts from $10,500, miners to blame?

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blockchain
  • Bitcoin price recent fall pinned to miner liquidation 
  • Chinese miners could be forcing prices lower to wade off competition
  • Analysts are confident, expect prices to rally in the medium term
  • Immediate resistance is at $10,500
  • Support is between $9,800 and $10,000

The Bitcoin price, albeit the optimism from the wide trading community, is weak. On Sep 13, the price of the world’s most valuable coin slid three percent. 

At the time of writing, the Bitcoin price is changing hands at $10,361 against the greenback, at near parity, but under-performing ETH, losing four percent in the last week of trading.

The Relation between miner liquidation and the Bitcoin price

To explain the dip of the Bitcoin price is news of miners liquidating their stash, heaping pressure on an already fragile price. 

Miners play a dual role. 

In a Proof-of-Work system, they are tasked with validating transactions in exchange for 6.25 BTC for every successfully mined block. This is a resource-intensive activity designed to be complicated and more competitive every after 240,000 blocks. 

To offset operational expenditure, mining farms regularly unload their stash either through OTC markets or to the open market. Their unloading is mostly interpreted as bearish and soon after, prices often fall in response to the additional supply. 

According to GlassNode, BTC outflow from miners rose to a five-month high.

In a tweet, the analytics firm stated:

Bitcoin $BTC Miners to Exchange Flow (1d MA) just reached a 5-month high of 50.351 BTC Previous 5-month high of 44.479 BTC was observed on 14 August 2020.

From another point of view, mining pools could be dumping BTC to the open market to suppress prices and wade off competing pools who may want to foray. 

As per CryptoQuant’s CEO suggestion–in an interview with CoinTelegraph, the re-arrangement was necessary to keep the market from rallying by selling at calculated points.

I think it’s going to be the war of miners between those who want a Bitcoin price rally and those who don’t. As I know, some Chinese miners already realize their mining profitability (return on investment), and they might not want new mining competitors joining the industry because of the bull market.

Bitcoin price analysis

Bitcoin price retracts from $10,500, miners to blame? 1
Bitcoin Daily Chart by Trading View

The Bitcoin price is swinging from neutral to bearish. From candlestick arrangement, bears are in control.

In the daily chart, the BTC price is trending below the middle BB, the 20-day moving average. With a negative gradient and bulls still struggling to reverse steep losses of early Sep, the path of least resistance could be southwards if there isn’t a break above the immediate resistance level at $10,500.

Since the Bitcoin price is oscillating inside Sep 3 trade range with light participation, the candlestick arrangement suggests weakness from an Effort-versus-Result point of view. As such, every high—in lower time frames—could be a selling opportunity with the immediate target at around $9,600 and $10,000 support zone.

A break below this accumulation level could see the Bitcoin price crater to $9,000 and even $8,500 in a retest. Conversely, gains above $11,000 will solidify bulls and build a foundation for $12,000 in the medium term.

Analysts’ Comments

Ivan on Tech believes the Bitcoin price can “snap to $12,000” anytime:

TheMoonCarl thinks the Bitcoin and crypto scene is still young. He points to the low market cap of Bitcoin vis-à-vis gold. If Bitcoin captures only 20 percent of gold’s market cap, BTC would be trading at $110,000 each.

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