Bitcoin and Ethereum have both bounced back somewhat after dropping below crucial support levels earlier this week, a sales trader at UK-based digital asset broker GlobalBlock said.
Alexandra Clark said it is believed Bitcoin’s drop is partially due to a mining shift in China resulting from a ban in many provinces.
“This has forced many miners to shut down or migrate their hash-power outside of China’s borders to friendlier jurisdictions,” Clark said. “For example, Chinese Bitcoin mining firm BIT Mining has delivered a batch of 320 mining machines to Kazakhstan, with 2,600 more to follow. As the Chinese mining industry grapples with the challenges of relocating, it is expected that some will liquidate a portion of their accumulated bitcoin treasuries, either as a hedge against risk, to fund their migration or to exit the industry entirely. However, many see China’s crackdown as bullish news, likening it to the country’s ban on Facebook and Google in 2009 and 2010.”
Market participants are also likely factoring in the expiration of $2.5 billion of options and $2 billion in futures contracts set to expire June 25. When Bitcoin options expire the normal result is increased volatility, Clark explained.
Most holders are unlikely to part with their bitcoin during weak periods like the one we are currently seeing. Long-term players have also increased their holdings of late, Clark explained. Data from Santiment shows addresses holding between 100 and 10,000 BTC have added $367 billion to their holdings over the past month