Bitcoin plunged as low as $34,500 on Bitstamp just minutes ago as buying pressure finally began to subside heading into the weekend.
After peaking at $42,000 late last week, the cryptocurrency’s price action began to taper off heading into the weekend. This culminated in a strong flush lower over the past few hours that brought the leading cryptocurrency from the $40,000 region to lows at around $34,500 on some exchanges.
Chart of BTC's price action over the past few hours from TradingView.com
There appears to have been a large divergence between the price of Bitcoin on spot exchanges versus the price of Bitcoin on futures exchanges. It appears that there were spot sellers leading the dip, resulting in this divergence, as those on the futures market began to bet on a rebound.
This is made apparent by the high futures funding rate. The funding rate is the fee that long positions pay short positions on a recurring basis to ensure the price of the future is around that of the spot market.
Related Reading: Wall Street Veteran Kickstarts Own BTC Fund With $25m Investment
Too Much Panic Over the Bitcoin Drop?
Crypto-asset analysts argue that there is too much panic over this one move. One noted that the cryptocurrency is now only trading at prices seen 4-5 days ago.
Others note that the ongoing bounce seen in the Bitcoin price is a sign that there remains buying pressure on the sidelines that should maintain current price levels.
BTC "crashes" almost 20% to prices not seen since 4 days ago.
This move up has been so crazy we’re all losing grip on reality.
— DonAlt (@CryptoDonAlt) January 10, 2021
Related Reading: 3 BTC On-Chain Trends Show a Macro Bull Market Is Brewing
Featured Image from Unsplash Chart from TradingView.com Price Tags: xbtusd, btcusd, btcusdt Bitcoin Plunges As Low as $34,500: What Are Analysts Saying?