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This Is What Pushed Bitcoin Below $16,000 Threshold: Santiment

Mon, 11/21/2022 - 09:56
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Arman Shirinyan
As panic emerges on cryptocurrency market, $15,000 is no longer unrealistic scenario
This Is What Pushed Bitcoin Below $16,000 Threshold: Santiment
Cover image via stock.adobe.com

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

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The most recent Bitcoin plunge has surprised the majority of market participants, considering the fact that most of the dust settled after the FTX catastrophe. However, the first cryptocurrency is still having trouble keeping up with the selling pressure, and the reason has already been described by Santiment.

According to the analytical firm, the plunge to $15,800 for the first time in two years was caused by FUD due to the lack of trust in centralized exchanges that accelerated after the FTX drama.

Most investors in derivatives markets are liquidating their positions to withdraw remaining funds and deleverage their portfolios. Such a large spike in selling pressure at a time when the whole market is experiencing issues with liquidity is the perfect way to push the price of the first cryptocurrency to values unseen for years.

This thesis is also confirmed by the spike in address activity that usually happens during a large exchange outflow period when investors move holdings from third parties to self-custody. The opposite of this process usually happens when the market is rebounding and traders move their funds back on trading platforms to use leverage and maximize their profits, or gain exposure to alternative assets.

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The most likely scenario from here is the continued stagnation of the market due to the lack of liquidity and fresh inflows. According to CoinShares' data, institutional investors still avoid exposure to digital assets. The situation is unlikely to change until the stretch monetary policy in the U.S. prevails and investors abstain from additional risk exposure.

At press time, Bitcoin is trading at  $16,000 and losing 1.5% of its value in the last 24 hours.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.