$500 Bitcoin Price Crash Could Be the Start of a Bigger Drop, Here’s Why

$500 Bitcoin Price Crash Could Be the Start of a Bigger Drop, Here’s Why

Bitcoin creator Satoshi Nakamoto could be a bearish ‘ghost’ according to what happened on Wednesday.

BTC watched a technical resistance test at $10,000 while trading some $200 below it before almost suddenly it crashed by about $500 in just 15 minutes. So it looks like traders sold off nearly $9,800 after Twitter user Whale Alert tweeted about an old Bitcoin address becoming active.

Source: Twitter

The transaction tracker noted that around 50 BTC moved from the oldest Bitcoin address by a mysterious entity, adding that it potentially belongs to Nakamoto — the pseudonymous entity that created Bitcoin in January 2009. The block nonce pattern containing those 50 BTC showed they had been mined in February 2009.

The largest crypto-whale is believed to be Nakamoto. His early involvement with Bitcoin allowed him to mine about 1.1 million BTC at current exchange rates, which is worth about $10 billion. The first signs of sell-off arose from fears that he was dumping his share on exchanges.

But the speculation cooled off after research reminded investors that the block’s nonce pattern relating to the 50 BTC was not the same as Nakamoto-mined blocks. That helped bitcoin escape a deeper fall as it rebounded six hours after the crash to above $9,500.

Technical Slip

The roughly $500 dump somewhat uncovered one of the biggest fears lying beneath an otherwise bullish Bitcoin market: that of older whales cashing out their Bitcoin savings worth billions of dollars. Data aggregation portal Messari wrote about “anxiety” among traders and investors over Nakamoto ‘s treasure in his letter to customers Thursday.

“Satoshi is estimated to have over 1.1 million coins, and there is the fear (albeit overblown) that those coins could be market dumped on an exchange, which would tank Bitcoin’s price,” the letter read.

But it could very well be a technical slip. Earlier, the bitcoin price rally hit a roadblock at a downward long-term trendline. As shown in the chart below, the level has thus far refused to buckle under bull pressure.

The sell-off may have been triggered by the Nakamoto FUD. But the presence of the Descending Trendline may have fuelled the downside move.

More Bitcoin Downtrend Ahead

The BTC / USD exchange rate traded below $9,500 on Wednesday. Showing the first signs of price contraction after the $10,000 retest on the Descending Trendline. If the downside continues, the price may fall to seek support on the 200-day moving average (orange wave).

That puts the target down close to $8,000.

The $9,500 support, on the other hand, could prompt traders to retest $10,000. A breakout action could extend the upside target to $10,500 high for Bitcoin’s YTD.