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Bitcoin Price Drops $1,000 in Worst Sell-Off in a Week

Bitcoin has fallen precipitously in the past few hours and is testing a key level of psychological support near $18,000.

At around 06:00 UTC on Dec. 8, the price of the world’s first cryptocurrency fell to around $18,031 from $18,770. It subsequently retraced slightly to $18,200 by press time, according to CryptoX’s bitcoin price index.

The last time bitcoin experienced a similar drop was on Dec. 1 after the bellwether cryptocurrency reached an all-time high of around $19,920, per the BPI.

According to Ki Young Ju, CEO of CryptoQuant, the availability of sizable amounts of bitcoin on exchanges provided by large holders – “whales,” as they are often called – contributed to the price drop.

“When it comes to short-term price prediction, I think the most important data is supply and demand, said Ki Young Ju, CEO of CryptoQuant. “I think this plummet was started from bitcoin…whales who wanted to keep their bitcoin on exchanges making them readily available for sell orders.”

Others see recent buyers taking their winnings out of the market. Lucas Huang, head of growth at decentralized exchange Tokenlon, noted that from a retail trading perspective, “an 80% increase in bitcoin price over only two months might be a profit too tempting not to take.”

Meanwhile, another signal may be coming from how Wall Street views the prospects of one particularly large buyer in recent months. Tyler Radke, an analyst at Citibank, downgraded his recommendation on business intelligence firm Microstrategy to “sell” from “neutral,” flagging to investors bitcoin euphoria might be overextended.

Not everyone is bearish on bitcoin. “Bitcoin’s latest move down is a rest stop on the way to $30k levels by mid-2021,” said investor Jehan Chu, co-founder of Kenetic Capital. “Experienced bitcoin investors are well accustomed to these drops and understand them as opportunities to buy the dip. Longer term, we can expect these moves to become less frequent as institutional funds continue surging into the market and the volatility declines further.”

Yet in the near term for technical analysts, the latest price action for bitcoin represents a continuing narrative of lower highs on the daily chart. That signals weakening buyer interest in the midst of increasing daily sell volume.

Should buyers fail to push prices above $18,600, a likely spell of further downside may break out as the short-term trend flips from bullish to bearish.

Other notable cryptocurrencies are also suffering, including ether, XRP and litecoin. Those three are down between 7% and 9% in the past 24 hours as well. In fact, all 17 free-floating cryptopcurrencies besides bitcoin in the CryptoX 20 have dropped between 6% and 12% in the past day.

Meanwhile traditional markets have held steady on the day with the Dow Jones Industrial Average closing 0.35% in the green and the S&P 500 index up around 0.28% on the day.