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Bitcoin pulls back 4% from recent high

The BTCUSD pair advanced 1.75% to $52,663 on Monday, September 6. The pair reached an intraday high near $52,920 during the Asian session. Sentiment was likely driven by the purchase of bitcoins by El Salvador’s authorities. To remind, the law designating bitcoin as legal tender took effect in El Salvador on September 7. The authorities bought up 400 BTC, spending $21 mln. Speculation for the country’s officials began unsuccessfully as bitcoin fell 4% against the dollar, for a loss of $840,000.

Buyers were unable to move higher. Selling broke out at 11:10 (GMT+3), with price action dropping to $50,402. According to bybt.com, eight exchanges have liquidated $76.8 mln in long Bitcoin positions over the past 12 hours.

By the time of writing, price action recovered to $51,112. Perhaps the sharp downswing was a technical correction. The price is retracing to highs without trading volumes increasing. We do not rule out that someone might have checked buying activity by selling in order to calculate how much more to raise the price in order to profitably sell bitcoin without attracting attention. Clearly there are OTC platforms for large transactions, but if there is no liquidity, the markets will have to turn to spot trading. Otherwise, there is no need for such exchanges if they are unable to meet demand.

The price rebounded 1.6%. The increase was approximately 38.2% of the fall from $52,290 to $50,402. Buyers shied away from a sharp drop, decreasing their activity and opting for the sidelines.

There is one more important issue. Risk-sensitive assets nosedived this morning after the Reserve Bank of Australia meeting. The aussie dollar acted as the driving force for the entire market. The decline coincides with the trend seen in Bitcoin, except that the latter fell sharply on the third wave of selling of the Australian dollar. If the AUDUSD and Bitcoin pair recover during the North American session, then there was a connection. Moreover, US markets reopened today after the Labor Day holiday.

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