Dollar And Profit Taking Pause Bitcoin’s Rise To $16k

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Last Updated on 10 November 2020 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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Bitcoin is continuing its steady climb higher as it is now trading well above $15k again, eyeing the absolute last line of defense before the attack towards it’s all-time-high of $20k. According to technical analysts, the $16k threshold would release an unlimited stream of FOMO money that would all pour into Bitcoin like sheep. However, yesterday it was met with resistance as soon as it reached the $15,800 mark, and quickly sold off to end near $14k again. We wonder why.

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Selling pressure

First off, one has to remember that Bitcoin is for most of the major players involved in the cryptosphere still an investment good and that they tend to take profits during the bull runs. It is by now common knowledge that several of these whales work in groups and signal to each other whenever a selling point is reached that this is the time to unload and take profit. After the halving of Bitcoin in May, several flash crashes already pointed to this, with a major one happening when it was exactly 5pm in Silicon Valley. At the time, famed economics professor Nouriel Roubini even called out trading in Bitcoin as a rigged gamed because of it.

On August 2nd of this year, as Bitcoin also lost 12% in a matter of minutes, the first reaction in the cryptosphere was the omnipresent question: Whales playing?

Truth is that whales still hold the majority of the cards and that if they get together to take profits on a (still) minor investment good as Bitcoin is at this moment, they can. On the other hand, the fact that Bitcoin by now is once again trading above $15k means that there is lots of buying pressure as well. It is therefore safe to assume that the rally will last.

Dollar and Pfizer

Secondly, and this was obvious yesterday, the announcement that Pfizer had developed a possible Covid-19 vaccine led to a strange reaction on markets. The Dow Jones rose by about 3% , whilst the tech-laden Nasdaq sold off by 1.5%. Reason for this is that the market reacts to a possible ending of the Covid-19 pandemic by boosting stocks that have suffered during the pandemic, and punishing those that have won.

This rise of the Dow Jones also meant that the American Dollar, which had been losing ever since it became obvious that Joe Biden had won (we have discussed the Biden win’s effect on Bitcoin earlier), started to rise against the Euro again. In consequence, every investment good that is seen as a safe haven against the dollar’s inflation, aka gold and Bitcoin, lost again.

However, in conclusion, the fact that Bitcoin at the time of writing is already trading back above $15k again, means that all those in the cryptosphere could possibly be looking forward to a great Christmas. Time will tell.