Despite retracing to below $30k in the last few hours before bouncing back to around $31k, BTC is being tipped to drop even further and China has something to do with it.
Chinese New Year sell-offs
As the Chinese prepare for their New Year festivities coming up on February 12, a report from Stack Funds, a crypto investment firm, anticipates strong selling pressure due to New Year festivity sell-offs. As per the Jan 28 report, the current BTC selling pressure is likely to continue in the short term, as Asian miners offload their holdings ahead of the holidays.
According to Stack Fund’s head of research, Lennard Neo, a decent amount of sell pressure is coming from Chinese miners. Neo went on to say that the Miner Position Index, MPI, has seen a big surge recently, indicating that BTC is due a substantial pull back. According to the Stack Funds head of research, we are yet to see the floor of the current pull back yet, as China prepares to mark the New Year.
“With upcoming Chinese New Year holidays, we expect this selling pressure to continue in the short-term, providing good entry opportunities for market participants […] We also expect this volatility to persist in the coming weeks, adding pressure to further corrections for Bitcoin prices.”
Primed for heavy spending
Having marked the New Year just 28 days ago, the rest of the world is quite cognizant of the kind of spending associated with New Year celebrations. The situation is no different in China where they mark their milestone a month later. Known as the Lunar New Year or Spring Festival, the Chinese New Year is marked with a lot of pomp and colour. Just like the festivities that were seen when the rest of us were closing-in on our date, the Chinese are expected to open their wallets and purses. That would explain the mass BTC liquidations already being seen in China.
A lot of analysts predict a short term bear for Bitcoin just like Stack Fund’s Neo. A good number of those analysts also predict a recovery and a subsequent strong rally soon after.
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