The last time bitcoin (BTC, -6.30%) experienced a similar drop was on Dec. 1 after the bellwether cryptocurrency reached an all-time high of around $19,920, per the BPI. According to Ki Young Ju, CEO of CryptoQuant, the availability of sizable amounts of bitcoin on exchanges provided by large holders – “whales,” as they are often called – contributed to the price drop.
“When it comes to short-term price prediction, I think the most important data is supply and demand, said Ki Young Ju, CEO of CryptoQuant. “I think this plummet was started from bitcoin…whales who wanted to keep their bitcoin on exchanges making them readily available for sell orders.”
Others see recent buyers taking their winnings out of the market. Lucas Huang, head of growth at decentralized exchange Tokenlon, noted that from a retail trading perspective, “an 80% increase in bitcoin price over only two months might be a profit too tempting not to take.”
Meanwhile, another signal may be coming from how Wall Street views the prospects of one particularly large buyer in recent months. Tyler Radke, an analyst at Citibank, downgraded his recommendation on business intelligence firm Microstrategy to “sell” from “neutral,” flagging to investors bitcoin euphoria might be overextended.
Other notable cryptocurrencies are also suffering, including ether, XRP (XRP, -13.85%) and litecoin (LTC, -10.52%). Those three are down between 7% and 9% in the past 24 hours as well. In fact, all 17 free-floating cryptopcurrencies besides bitcoin in the CoinDesk 20 have dropped between 6% and 12% in the past day.
Meanwhile traditional markets have held steady on the day with the Dow Jones Industrial Average closing 0.35% in the green and the S&P 500 index up around 0.28% on the day.