Why Bitcoin could take another bite at $17,000

After seeing some relief over the weekend, Bitcoin is back above $20,000. The No. 1 cryptocurrency by market cap fell below its 2017 all-time high as selling pressure increased due to the current macroeconomic environment.

Related reading | Bitcoin Derivatives Exchange Reserves Soar as BTC Continues to Plunge

At the time of writing, Bitcoin (BTC) is trading at $20,500, gaining 6% over the past 24 hours. A different story was recorded over the past 7 days with a 24% loss.

BTC is seeing relief on the 4-hour chart. resource: BTCUSD trading view

Former BitMEX CEO Arthur Hayes claim Institutional forced selling sparked increased selling pressure. As the BTC price fell further, the entity was forced to liquidate its position.

Hayes believes that Canada’s bitcoin-use exchange-traded funds (ETFs) may be responsible for the downside. The investment vehicle is settled in physical Bitcoin, According to the purpose, When customers buy ETFs, they are buying “real bitcoin.”

The former BitMEX CEO claimed he was unfamiliar with the ETF’s redemption process. However, as the chart below shows, the investment vehicle appears to have put 24,500 BTC on the market.

Source: Arthur Hayes via Twitter

This represents nearly 50% of ETF assets, and it seems logical that if BTC is sold hastily, Bitcoin loses support around $20,000 and is forced to trade with the rest of the crypto market. Buyers emerged and absorbed the downward price action.

This has allowed Bitcoin to reclaim the $20,000 area and indicates that Bitcoin is rapidly below these levels. Hayes talks about the conditions that sent BTC prices to new lows and why it experienced a relief:

Over the weekend, BTC fell to a low of $17,600 due to heavy trading volume, down nearly 20% from Friday, despite the closure of fiat railroads. Smells like forced sellers triggering streak stops. The market rebounded quickly on low volumes after sellers dumped their bags.

Why Bitcoin will suffer more

The initial reaction to the downward pressure was good, but as Hayes explained, it happened on a low weekend with low trading desk volume. Crypto markets may see the price of BTC fall to another low. The former CEO said:

Given the poor risk management of cryptocurrency lenders and overly lax loan terms, expect more $BTC and $ETH to be forced to sell off as the market figures out who is swimming naked.

Related reading | TA: Bitcoin recovery stalled near key juncture, key resistance intact

With this structure that led to a spike in selling pressure still intact, bears are likely to continue pushing B’C lower. Meanwhile, there are opportunities for long-term players to add to their holdings, Hayes concluded:

Is it over…I don’t know. But for those skilled knife catchers, there may be more opportunities to buy coins from those who have to hit every bid no matter the price.

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