Finally, after an unprecedented rally during the first complete week of 2021, the BTC price has entered correction tanking more than 10% and slipping below $36,000 levels. At press time, Bitcoin (BTC) is down 11.58% trading at $35,734.
The recent Bitcoin (BTC) price correction comes after two days of price consolidation around $40,500 levels and amid a huge selling pressure coming from miners. As per the data from CryptoQuant, the Bitcoin Miner Position Index (MPI) reached its 17-month high at levels unseen from July 2019.
The last time when MPI reached these levels, the BTC price was trading at around $14,000, after which it corrected 50% by the end of 2019. As we can see from the charts, soon as the MPI levels crossed 11.5 levels this time, BTC has entered a sharp correction of 12%.
However, CryptoQuant CEO Ki-Young Ju explains that the miner selling pressure has been building up over the last month. It is just that Bitcoin continues to receive major backing from institutional buying.
Institutional Bitcoin (BTC) Purchase on Hiatus
As we have recently seen, there’s an unprecedented institutional demand for BTC that has been offsetting the selling pressure.
But if we see the Grayscale Bitcoin Trust (GBTC) chart by Bybt, it looks like institutions have gone on a hiatus for the moment. After December 25, i.e., when BTC was at $24,000 levels, Grayscale has made no additional purchases, and its total holdings remain the same just above 607K Bitcoins.
Ultimately, it seems that the miner selling pressure has overweighed the BTC buying/holding momentum and we are now seeing a profit booking. As per historical trends, the BTC price has always corrected 30-40% from its new high levels, however, some analysts believe that the institutional participation in BTC, unlike before, will hold up the correction only to 10-15% and we can see fresh buying anytime soon. Also, the BTC mega-whales have resorted to heavy buying in 2021.
In the 2017 #Bitcoin bull market, corrections found demand after drops from 30-40%
In the current bull market demand seems to appear after corrections between 15-20%.
This is probably indicative of a difference in buyers: retail (2017) vs institutional (today). pic.twitter.com/OfRX28lEco
— Vijay Boyapati (@real_vijay) January 10, 2021
Currently, there’s been major anxiety around Tesla’s participation in Bitcoin after Elon Musk showed interest in BTC. Will companies like Tesla, move part of their company balance sheet or reserve cash in Bitcoin to protect capital. Let us know in the comments below.