Over the past few days, Bitcoin [BTC] has recorded a 9% decline, moving from its all-time high (ATH) of $99.5K to $90.7K, with analysts attributing this drop to panic selling by short-term holders (STH) and the Thanksgiving holiday in the United States.
Currently, the leading cryptocurrency has stabilized above $93K, mitigating the significant downturn witnessed in the last 24 hours. But what led to the sudden crash on Tuesday, the 26th of November?
Reasons Behind Bitcoin’s Price Decline
A notable portion of the decrease occurred on November 25th-26th, a period in which experts pointed to panic selling by short-term holders as the primary cause.
Crypto analyst James Van Straten highlighted that short-term holders offloaded nearly $4 billion worth of BTC, surpassing the carry trade unwind seen in August.
Another factor that could have influenced this drop was the Thanksgiving holiday in the United States, as suggested by Alex Thorn, the head of research at Galaxy Digital.
Referencing the Bitcoin dump during Thanksgiving in 2020, Thorn remarked,
“Do you recall the significant drop in Bitcoin prices during the Thanksgiving period in 2020? BTC witnessed a 17% decline between Wednesday, Nov 25, and Friday, Nov 27, 2020. Subsequently, the BTCUSDT pair surged over 3 times in the following 5 months. Could history be repeating itself?”
Thorn indicated that based on historical patterns, the recent 9% dip could potentially mark the local bottom for Bitcoin post-Thanksgiving.
Straten supported this view, emphasizing that after previous dumps, Bitcoin tended to follow the realized price of short-term holders. He stated,
“The current scenario resembles that of Q4 2020, where a significant sell-off occurred during Thanksgiving. Following this, the price of BTC surged from $10K to $60K, experiencing intermittent pullbacks while using the Short Term Holder Realized Price as a support level.”
Does this imply that $90.7K represents the bottom for Bitcoin during this Thanksgiving period? Not everyone shares the same level of optimism.
According to BTC trader Cryp Nuevo, the downward trend might persist until the $85K-$88K range before a reversal.
Whether Bitcoin will dip below $90K remains uncertain, but the general market sentiment leans towards a probable recovery post the Thanksgiving holiday in the US.