The price of Bitcoin (BTC) rose to as high equally $15,840 before crashing to $xiv,800. Just five hours after reaching an intraday top, the dominant cryptocurrency dropped over 6%. This massive fasten in volatility was likely caused by iii major factors.

The three catalysts for the precipitous downtrend were the recovery of the dollar, the pass up in golden price as Pfizer announced that its COVID-xix vaccine trials are producing positive results, and whales dumping BTC.

BTC/USD 4-hr chart. Source: TradingView.com

Precious metals and Bitcoin savage in tandem

Co-ordinate to the Associated Press, Pfizer announced that the 3rd stage of its vaccine trials is going well. The pharmaceutical behemothic said its vaccine is currently proven to be 90% constructive in COVID-nineteen prevention.

To appointment, Pfizer has tested the vaccine on  44,000 participants, and if it proves effective, the next footstep would exist for the United states of america Food and Drug Administration to conduct its own tests before approving the vaccine for mass production and distribution.

Afterward the vaccine announcement, the Dow Jones Industrial Average surged 1,000 points, leading to a strong U.South. stock market rally. Every bit the U.S. dollar and stocks triumphed, Bitcoin and aureate dwindled simultaneously.

Michaël van de Poppe, a total-time trader at the Amsterdam Stock Exchange, pinpointed the recovery of the U.S. dollar index and suggested that alternative stores of value, like gold and Bitcoin, are priced against the dollar. Equally such, when the dollar recovers, the toll of BTC could fall steeply aslope precious metals.

Van de Poppe explained:

"In that location nosotros seem to become. $DXY bouncing upward as there's more certainties at this betoken, through which assets like #bitcoin, gold and silver driblet downwardly substantially. A correction on $BTC would be tremendous and a dandy opportunity in full general."

Whales began to aggressively sell BTC

When the drop occurred, CryptoQuant, an on-chain market analysis business firm, found that whales were selling Bitcoin.

Traders, similar the pseudonymous investor "Byzantine Full general," found a similar blueprint. As Bitcoin dropped in a whale-induced pullback, retail investors were continuously longing BTC.

Whales had several bonny reasons to sell BTC at $15,800. Outset, information technology is a major resistance area right below a pivotal level at $xvi,000. If the $16,000 level breaks, technical analysts take said BTC would likely position for an best high.

When whales sell, the market place often sees a strong reaction. Whether whales would begin to take turn a profit on their shorts and effort to resume the bull trend remains unclear. For at present, the pullback has stalled, with BTC recovering above $15,100, indicating a curt-term tendency reversal to the upside.

Long-term players are holding strong

Despite the heightened level of volatility in the market, cryptocurrency trader Cantering Clark emphasized that long-term investors are unlikely to be fazed. He said:

"This volatility is just fast money funds that play $BTC as a higher beta $Gilded dumping on vaccine news. The players that enter on behalf of the longer-term thesis for Bitcoin are not changing their positioning."
Brusque Term Holder MVRV. Source: Glassnode

In add-on to the factors mentioned to a higher place, analysts at Glassnode noted that the electric current short-term holder activity is reminiscent of previous bull trends. As such, if BTC recovers strongly from the recent drop, the chances of a rally continuation could increase. Glassnode said:

"#Bitcoin Short-Term Holder MVRV has been holding its positive ratio for the past six months — and bounced off the neutral line yet another fourth dimension. Historically, holding this support level is indicative for an ongoing $BTC bull market place."