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Bitcoin looks like it may suffer a gruelling correction in the coming weeks, according to eToro analyst Simon Peters.

The entire cryptocurrency market experienced a notable pullback yesterday with Bitcoin falling to as low as $9,000 before finding a bounce.

The move to the downside was replicated in traditional markets, with the S&P500 suffering a 6.77% plunge.

The recent cryptoasset pullback coincides with a similar retraction in global equity markets. Peters said. It appears the narrative in markets has somewhat changed from potential recovery and reopening of economies post-lockdown, to a potential second COVID-19 wave, especially after several US states have reported a spike in coronavirus cases since reopening their local economies.

Optimism has dissipated and realism has set in, in both the cryptoasset market and global stock markets. If we begin to see widespread second spikes of COVID-19, then it would probably cause another sell off across all markets. If the price drops below the $8,500 level, investors should be worried.

He goes on to say that while a short-term Bitcoin correction may be difficult, it will be the beginning of a new bottom formation that will act as a platform for a rally into the second half of the year.

He continued: With bitcoin there is always the possibility for a further drop, but its my view that we are seeing a new bottom begin to form. Fundamentals remain positive for the asset, especially given the recent Fed meeting and indication of continued economic stimulus and consistently close to zero interest rates.

At the time of writing Bitcoin is trading at $9,453 with notable levels of support at both $9,000 and $8,830. Breaking below those levels would indicate a change in market sentiment with potential downside targets emerging as low as $7,100 while there is also a chance of a bounce at $7,800.

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Analyst predicts major correction in price of Bitcoin - Yahoo Finance

Within the last hour, the Bitcoin (BTC) price rose to $10,180 on BitMEX before quickly reversing to $9,600. The quick rejection means that for the third time in 30 days, Bitcoinsprice has rejected at the $10,000 resistance level.

Three factors that may have contributed to the volatility are: the Federal Reserves Federal Open Market Committeemeeting, the liquidation of $14 million worth of short contracts, and the continued resilience of the multi-year resistance area from $10,000$10,500.

BTC paints a darth maul candle at BitMEX. Source: Tradingview

The Fed had an FOMC meeting shortly before the sudden spike in Bitcoins volatility. During the meeting, Federal Reserve chairman Jerome Powell stated the jobmarket may have hit rockbottom.

Since March, institutional investors have been cautious about the stock markets short-term trend due to the state of the labor market.

The unemployment rate was initially projected to remain in the double digits and this was a major concern to high-net-worth investors. To shield against downside risk, these investors took shelter in safer alternatives like low-risk bonds.

According to Welt market analyst Holger Zschaepitz, Powell said:

We want investors to price in risk like markets should. [He] says Fed would never hold back support for the economy because it thinks asset prices are too high. Popping asset bubble would hurt job-seekers.

Despite the positive data coming out of the FOMC meeting, both the United Statesstock market and Bitcoin price dropped after it was held.

The trend of the largest digital asset on CoinMarketCap and equities suggests that as soon as the Fed meeting ended, a sell-the-news pullback occurred.

Within a 30-minute window, $14 million worth of Bitcoin shorts were liquidated on BitMEX alone. Compared to other exchanges, the price of BTC rose higher on BitMEX by around $100.

BitMEX XBTUSD liquidations. Source: Skew

As the price of Bitcoin hit $9,600 in a 4% drop within less than 15 minutes, another $2 million worth of longs were liquidated.

In total, in about an hour, around $16 million worth of futures contracts were liquidated in quick succession.

Due to the decline in spot volume in the Bitcoin market since early May, the futures market has accounted for a large portion of the daily BTC volume.

When tens of millions of dollars worth of futures contracts are liquidated in a highly volatile price move in a short period of time, it can cause the price of BTC to move quickly ineither direction.

Since mid-2019, the $10,000$10,500 area has acted as a strong resistance zone for Bitcoin. Every time the price of BTC attempted to break out of this range, it was met with a brutal pullback.

Recently, the price of Bitcoin surpassed $10,000 moments before its big fall to $9,600. Cryptocurrency investor Koroush AK said the move reduced the importance of $9,850 as another resistance level.

He said:

This move was significant. $9,850 is now less important as a resistance. $10,000 is now more important.

In the near-term, the sudden upsurge may weaken the barrier BTC has to break to see an extended rally. However, it also leaves BTC vulnerable to a steeper pullback given that it hit an important liquidity area.

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3 Reasons Why Bitcoin Price Continues to Reject at $10,000 - Cointelegraph

The price of Bitcoin (BTC) has risen by 170% in the last three months from $3,600 to $9,700. Despite this immense 3 month recovery, a series of fundamental factors point to the possibility of another uptrend in the near-term.

Three reasons Bitcoin is likely to see an upsurge are increasing exchange outflow, miner revenue finding support, and the rising number of so-called hodlers or investors that hold BTC for prolonged periods.

When the outflow of Bitcoin from exchanges increases, it suggests investors are preparing to hold BTC for the long term.

Typically, exchange users withdraw Bitcoin with the intent of sending the BTC to a personal wallet and this trend often indicates that users have less appetite to trade Bitcoin in the foreseeable future.

The decline in Bitcoin exchange outflow coincides with a recovery in miner revenue. As miners generate more BTC through mining in the aftermath of the latest hashrate difficulty adjustment, existing miners are becoming more profitable.

If the operational costs to mine Bitcoin declines, the need to sell more BTC in the short-term for major mining centers could also decrease. There is a possibility that the outflow of BTC is partially coming from miners.

Verifiable on-chain data shows that miners sold less Bitcoin than they mined in the past week. In the last seven days miners mined about 6,694 BTC and data shows they sold 6,384 BTC, netting a positive inventory of 310 BTC.

Bitcoin miners sold less than they mined in the past week. Source: ByteTree

A cryptocurrency trader known as Byzantine General wrote:

Exchange outflow keeps going up. Miner revenue is finding support. Miners are hodling more and more. So even if the chart doesn't look very exciting, I wonder where bears think the big sell pressure is gonna come from.

Overall, miners have been moving less Bitcoin and applying less selling pressure on the spot price. The combination of fewer sellers in the Bitcoin market and a consistent increase in long-term hodlers raises the likelihood of a continued rally.

The prediction of a new phase of upward momentum for Bitcoin in the near-term is primarily based on the assumption that miners will not sell much BTC in the coming months. But, sharp shifts in BTC price and the difficulty to mine BTC could quickly cause a trend change.

An ideal scenario for a strong rally in the third quarter of 2020 would require that the price of Bitcoin remains stable above $10,000 and that the amount of BTC sold by miners on a daily basis continues to decline.

If this happens, it would signal that the price of Bitcoin broke out of a multi-year resistance with growing confidence of both investors and miners, making a proper long-term bull market possible.

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3 Reasons Bitcoin Price Could Be on the Verge of a New Uptrend - Cointelegraph

Bitcoin has has long been feted as a new form of money, a two-finger salute to the establishment, even as a digital equivalent to gold, but its not often prized for its stability. That could change with the introduction of a new futures contract.

Crypto exchange BTSE has taken the unorthodox decision to price tether gold futures contracts in bitcoin, rather than in the more conventional U.S. dollar.

Heres how it works: Its a perpetual contract a future without expiry that tracks the value of one tether gold (XAUT) token, which itself tracks the value of one troy ounce of physical gold. Its also built on the ERC20 token standard, which means it can be pretty much traded on any crypto exchange.

Unlike other contracts, this one is priced in bitcoin. While the USD spot price of XAUT tokens is currently $1,720, according to CoinGecko, BTSEs contracts are trading around the 0.17 BTC mark.

The contract allows traders to compare and speculate on whether bitcoin or gold will turn out to have the most demand and outperform the other, as a new store of value.

Imagine it as gold versus bitcoin, a BTSE spokesperson said.

Still, a gold/BTC contract is bound to raise a few eyebrows.

Like regular futures, perpetual contracts have forced liquidations. If the spot price crosses a certain threshold the contract automatically settles, at a loss to the holder. Crypto observers are all too familiar with these and its not unknown for millions of dollars worth of USD-quoted bitcoin contracts to liquidate in one fell swoop.

Surely, a contract quoted in bitcoin would run the risk of liquidating all the time?

BTSE reckons thats not likely because bitcoin and gold have a positive correlation against the dollar.

If the two assets are positively correlated, then the price volatility of this new instrument is, by right, even lower than Gold/USD, a spokesperson said. Thats because the price of gold and bitcoin will likely fall by an equivalent ratio, so the contract remains, more or less, stable.

Bitcoin has long been dubbed digital gold without having any sort of relationship with it. That started to change earlier this year when, against the dollar, it developed a correlation to the yellow metal.

In a report in April, Coin Metrics said the correlation between bitcoin and gold suddenly increased on March 12 Black Thursday. The market, they argued, might be treating both as safe havens during increases in quantitative easing and monetary inflation.

Revisiting the relationship last week, Coin Metrics said: The correlation between gold [and bitcoin] has consistently maintained relatively high levels for several months now, a phenomenon that has not been historically observed.

Not everyone agrees. Charles Bovaird, vice president at Quantum Economics, says the relationship between gold and bitcoin over the past 90 days remains very weak, at under 0.35. In other words, the correlation has not been high enough to be significant, at least during this particular time frame, he said.

But BTSE argues that in a darkening macro backdrop, where central banks are increasingly relied upon to save the day, the market will begin to treat bitcoin more like a store of value.

As it does, so will its correlation to gold improve, making the prospect of forced liquidations for its gold contract priced in bitcoin less likely. In stark comparison, contracts quoted in dollars, which isnt correlated to gold and whos value could change depending on the effects of increased central bank stimulus, might feel the pressure a little more.

If that happens, bitcoin would become more stable than the greenback.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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BTSE Exchange Offers Futures Contracts Tracking Tether Gold and Priced in Bitcoin - CoinDesk - CoinDesk

A record ethereum transaction fee has been paid today: $2.6 million to transfer $134.

The user probably mixed up the fields on the value of the transfer and the fee, eventually paying 10,668 ETH in fees, or $2.6 million, on a transaction mined by Sparkpool.

A nightmare come true, the customer sent 0.55 ether, worth $133.95, according to a record of transactions broadcast on the Ethereum (ETH) network. The money was sent to an address on the South Korean crypto exchange Bithumb.

The funds may be lost forever. Most blockchains are built to prevent transactions from being reversed once the sender confirms it.

Moreover, the fee may have since been distributed to the different miners under Sparkpool as a reward for processing transactions.

Sparkpool said in a tweet on June 10: We are further investigating the incident of unusually high tx feeThere will be a solution in the end.

The Chinese miner has previously repaid a user half of the 2,100 ETH accidentally paid as fees in a 0.1 ether transfer.

There is suspicion of underhand dealing, with some members of the Ethereum community alleging manipulation of the transaction by Sparkpool, or that it was an attempt at evading tax, or money laundering.

In general, the average ETH transaction fee is up more than 637% since January, as the network became congested due to a high number of transactions passing through it.

Transactional errors are not uncommon in the crypto industry, but they dont often come as big as the latest ether gaffe. In 2017, someone paid 50 bitcoin (BTC) in transaction fees to send just under 10 BTC.

Some analysts suggest that blockchain networks should be able to reject transactions if the fee exceeds the average highest fees of the previous 10 blocks mined, just in the same way, say, the Bitcoin blockchain rejects fees that are too low.

What do you think about errors in cryptocurrency transactions? Let us know in the comments section below.

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Nightmare Come True: User Pays $2.6 Million in Transaction Fees to Send $134 of Ether | Altcoins - Bitcoin News