Analysts were cautious to celebrate when Bitcoin prices jumped to $10,200 on June 1 as the cryptocurrency continually tests the $10,000 level after repeated attempts to stay above the five-figure mark. It would take $10,500 for Bitcoin to keep from dipping under $10,000 again and this prediction came true on June 2, as prices went under $9,500 and even $8,600 on BitMex after less than a day of hovering between $10,000 to $10,100. This is the third time in less than a year that Bitcoin has failed to sustain a bullish momentum by surpassing the resistance level set at $10,500.
OKCoin’s executive Matthew Ficke commented that the price drop is likely due to simple trading behaviour from market participants, especially short-term traders who were encouraged to sell off their Bitcoin with the positive price action from the day before. However, unless prices are pushed further upwards, the long positions these traders may exacerbate short-term price volatility. Adding to this observation is also the overwhelming number of long contracts in the Bitcoin futures market as compared to short contracts, which led to an unbalanced, high funding rate, according to CoinTelegraph.
It is also likely that whales, who hold a large proportion of Bitcoin in the market, sold off some of their Bitcoin assets during this period and this naturally resulted in significant pressure on the price moving downwards.
Prices dropping more than 10% in less than 24 hours adds to the narrative of Bitcoin being the most volatile asset in the world rife with manipulation, but Bitcoin’s volatility rate has shown a steady decreasing trend, especially in 2020. According to data from Woobull charts, Bitcoin is ranked third in terms of highest volatility rate as compared to other assets at 14.6 points, with emerging currencies and oil at second (24.8 points) and first place (47.7 points) respectively. In fact, US real estate assets reflect increasing volatility in prices in fourth place after Bitcoin.
Bitcoin is currently trading at $9,483.
You may also want to read: Bitcoin Updates: Dancing with the $10,000 Level, US Weekend Civil Unrest & Depreciation of the Chinese Yuan
