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Why is the price of BTC dropping?



The price has stopped to correct today: Why is bitcoin price dropping?

Until yesterday, the trend was an impressive trip that had taken her to exceed 34,000 dollars.

Looking at the last three months, it has been an almost constant increase, starting at around $ 10,000 in early October 2020, going through $ 20,000 in mid-December, and ending at more than $ 30,000 in these first days of 2021.

To be fair, it's not a foregone conclusion that this journey has stopped today – today's downfall could also be a temporary setback.

In other words, every now and then the price of BTC suffers a correction even in the midst of an uptrend.

It already happened at the end of November, when he went from $ 19,000 to $ 17,000 in one day, or in December, when he lost $ 1,000 twice in 24 hours.

However, there are some current conditions that could suggest a more significant and lasting drop this time.

First, the parabolic rise in recent days. In fact, in just over two weeks the price has gone from $ 20,000 to $ 34,000, + 70% in 19 days which could also have the appearance of a speculative mini-bubble.

Why is Bitcoin going down? A look to the past

On the other hand, something similar, although at completely different levels, had happened between the end of 2016 and the beginning of 2017, when in 15 days the price had increased by 38%.

The parallel with 2016 is logical because that year there was also a halving, as in 2020. Since there have only been three halving's of Bitcoin (2012, 2016 and 2020), and since in those three years the trend of the price of BTC after the halving was somewhat similar, it may make sense to analyze the trend of late 2016 and early 2017 to get an idea of ​​what might happen in early 2021.

At that time, the correction started on January 5 and ended on January 12 with a loss of 28% in 8 days.

In fact, it is possible that at the beginning of the year the selling pressure is greater, compared to December, especially in the case of an uptrend.

Those who make a profit in December, if they sell and collect capital gains, they may have to pay taxes. If they decide to delay their sales for even a few days, they will still have to pay more or less the same taxes, but they will pay them 12 months later. Therefore, it is possible that in December the selling pressure, in the event of an upward trend, will decrease and increase in January.

To this must be added that when prices are particularly high, if they stop growing, many investors may prefer sell and monetize profits, instead of waiting and increasing risks.

This could favor a recoil at the beginning of 2021, although it is not entirely certain that, if it did occur, it would not be followed by further increases, as happened for example in 2017.


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