Ethereum and Bitcoin, including various other major cryptocurrencies, registered drastic price events in August.
On September 5, the Bitcoin price fell to a significant low across the world’s leading cryptocurrency exchanges to signify two consecutive days when the virtual currency tested its crucial level – according to CoinDesk estimations (See Below).
The September Bitcoin price drop as reported by CoinDesk (Source: CoinDesk)
Other coins, including Ethereum’s Ether, dropped by about 10 percent.
As at September 5, 10:59 PM GMT +3, Bitcoin fell to as little as $10,010.71 – an 8.4 percent decline that contrasted to the digital currency’s initial high of $12,044.04 at 12:59 AM GMT +3 last Wednesday.
Point to note, the cryptocurrency was trading at its lowest point since the July price drop to sub-10,000 figures.
What Are the Factors?
Market experts have tied Bitcoin’s latest price movements to both technical and fundamental factors.
According to an article by Medium, three reasons are attributed to the sudden price events that reflected on other digital assets like Ethereum. The CryptoQuant’s CEO Ki Young-Ju pointed to the crypto sales by miners.
The chief executive noted that cryptocurrency miners are known to transfer amounts of Bitcoin to exchanges on a periodical basis. During times when they decide to sell the digital assets, a relatively high amount of Bitcoin is sent to other wallets and exchanges. This kind of sell-off exerts massive selling pressure on Bitcoin leading to dramatic price events.
Otherwise, at the very high level, fluctuation in value of the US dollar must have caused an effect on the Bitcoin price event. A Cointelegraph article reflected on the effects of US dollar strength to the Bitcoin cryptocurrency.
Since the US fiat currency entered a period of recovery following four months of decline, Bitcoin and gold, both of which are valued against the dollar, weakened in value.
According to Kiana Danial of Invest Diva, the gains made by the US dollar produced a negative effect on the value of Bitcoin. Nonetheless, Tim Enneking of Digital Capital Management seemed to differ with the argument.
The 15-minute Ethereum Phenomenon
On August 2, Ethereum demonstrated a rather unusual behavior – its price stood at $418 before falling by 25 percent within a 5-minute time margin. According to Binance Futures, the Ethereum price took a dip to a $302 low before recovering to $385 in 10 minutes.
Experts observed that the entire cascade of events occurred within 15 minutes, an aspect that presented lots of critical lessons to aspiring retail investors in the crypto space.
So far, crypto pundits have attributed the above-mentioned Ethereum price action to two main factors.
The first reason is tied to the market structure in which the $410 to $420 range has served as a historical resistance area in the last three years. The second factor happens to be the outcome of a sudden sell-off that was followed by a series of digital asset liquidations.
Importantly, the Ethereum event seems to have occurred in tandem with the Bitcoin price in which an initial price drop caused rapid liquidations valued at more than $1 billion in Bitcoin and Ethereum futures contracts. It is reported that the latest liquidation event is the biggest since March 13’s Bitcoin price drop to below $3,600.
The weakness of Ethereum’s Ether was observed to have exacerbated the short-term plunge in Bitcoin’s price. The fact that Bitcoin has since recovered from the aggressive price event should indicate a substantial buying demand above the $10,000 mark – which could amount to longer consolidation.
Looking back, in June 2017, the Ethereum price rose from about $90 to surpass the $400 mark in less than a month. The dramatic rally took place way before the Bitcoin cryptocurrency’s record $20,000 price high.