Analyst says Chinese New Year could fuel Bitcoin selling pressure
Historically, the Chinese Lunar New Year or Spring Festival has influenced the Bitcoin market. Most often, the asset’s prices dip in the days leading to the event, over the years.
Analyst at Singapore-based Stack Funds shed more light on Bitcoin’s performance with regard to the upcoming holidays. Head of research Lennard Neo expected market selling pressure to continue in the short-term, because of the Chinese New Year. However, Neo believed that the market conditions would provide “good entry opportunities” for investors.
In the last seven days, Bitcoin was down by roughly 12% and fell under the $30,000 range. The asset reached as low as about $29,290, in the last 24 hours. However, Bitcoin slowly climbed back up to over $31,900 – the highest since the last dip and is currently trading at $31,434 at press time.
According to Lennard Neo, such volatility is likely to persist in the coming weeks and will continue to add pressure to further corrections for Bitcoin prices.
Additionally, the anlyst thinks that amid the week-long break, miners based in China will begin to offload their funds, which will add to the selling pressure. Over 60% of global Bitcoin mining pools are based out of China, and according to the analyst, Miner Position Index (MPI) has also increased, meaning Bitcoin suffered a pullback in price.
Furthermore, as of 10 January, MPI reached levels last seen in 2019 when Bitcoin suddenly fell below the $14,000 mark.
Based on Bitcoin price movements on Coinbase, BoxMining’s Michael Gu recently noted the long-term Bearish trend that emerged due to the Chinese New Year holidays:
Moreover, according to Michael Gu, Chinese Over-the-Counter (OTC) will remain shut during the festival which could further cause high market volatility.