Bitcoin has gone through some volatile times lately, with its value seeing substantial ups and downs. One day it may hit $70,000 or more, only to drop close to $60,000 the next day. The cryptocurrency is going through a rough patch in the market, yet there’s optimism that it will recover following the upcoming Bitcoin halving event. This article aims to explore the reasons behind Bitcoin’s price decline, regardless of whether this trend will be temporary or long-term.
Current Bitcoin Price Market Performance
In the last 24 hours, Bitcoin’s price ranged between a low of $62,332 and a high of $66,879, ending the day at around $63,000. This represents a 4.52% decrease in value compared to the previous day, and a more significant 11.33% drop over the past week. Consequently, Bitcoin’s market capitalization has decreased by approximately 4.47%, bringing it down to roughly $1.24 trillion. Despite this recent dip, Bitcoin remains the largest cryptocurrency based on market cap as reported by CoinMarketCap.
The Bitcoin trading market saw a 6.37% increase in volume, reaching approximately $45.16 billion. This represents a moderate level of trading compared to the total market value, with a ratio of volume-to-market capitalization at 3.49%.
Top Reasons Why Bitcoin Price is Falling
Various factors have contributed to the drop of BTC prices as discussed next.
1. Geopolitical Conflicts
One explanation for Bitcoin’s recent price drop is the escalating tensions in the Middle East following Iran’s attack on Israel. The value of Bitcoin decreased by more than 8.4%, from $67,000 to around $62,000. This decline resulted in a loss of over $130 billion in market capitalization almost instantly, causing ripples in other cryptocurrencies like Solana and Ethereum as well. With geopolitical instability and risks in the region increasing, investors have been moving away from riskier markets such as cryptocurrencies and instead opting for safe havens like gold and the US dollar. The possibility of further attacks, as hinted at by U.S. President Biden, has added to worries about a larger-scale conflict, further fueling uncertainty and volatility in the Bitcoin and global crypto markets.
2. Normal Pre-halving Retracement
An alternative explanation for the recent drop in BTC‘s price is that we’re experiencing a typical pre-halving correction. This phenomenon usually happens prior to the Bitcoin halving event. Historically, Bitcoin’s value has seen fluctuations during this period.
Around 18 days prior to the anticipated halving date in April (specifically, April 20th), a common trend is for the price of the asset to start decreasing.
Currently, Bitcoin often undergoes brief price drops, a pattern seen in its historical behavior. For instance, during the 2020 halving cycle, Bitcoin experienced a 20% price decline prior to the actual halving event.
A retracement is crucial in determining the lower end of Bitcoin’s price range during the accumulation phase that follows the halving. This stage plays a significant role in setting the trading levels for Bitcoin post-halving. Historically, the pre-halving retracement has established the lower boundary of this range, averaging around $60,600.
According to historical information, Bitcoin’s value might remain within its current low range. However, Rekt Capital, a well-known crypto trader and analyst, believes that there could be unexpected price swings below this range. These price movements may offer investors the chance to buy at lower prices before the post-halving period and the anticipated parabolic increase.
Based on the analysis, the period of price decrease and collection prior to the Bitcoin halving can be seen as a connected phase, offering investors a chance to strategically invest before the significant price increase, which usually happens several months post-halving.
3. Liquidations of Long Positions
The price of Bitcoin dipped due in part to traders closing their long positions in the futures market. This led to substantial volatility and liquidations, revealing a major shift in the market. Over $43.7 million worth of long positions were terminated in a single day, with a surprising surge to $20.6 million within just 4 hours. As a result of reduced buying interest, Bitcoin trading volumes plummeted by over $24 billion from their high of $45 billion on March 5, according to Coinglass.
4. Bitcoin ETFs Outflows
In the past few days, there has been a noticeable trend of Bitcoin ETFs in the U.S. experiencing outflows, except for BlackRock’s BTC ticker ETF which witnessed inflows. According to Farside Investors data, iShares Bitcoin Trust (IBIT) saw net inflows of $73.4 million on April 15, but this was offset by significant outflows from the Grayscale Bitcoin Trust (GBTC). All 10 spot Bitcoin ETFs reported net outflows on April 14 and 15, totaling $55.1 million and $36.7 million respectively. This trend extended to global Bitcoin investment products, leading to investor hesitancy and downward pressure on the price of Bitcoin. The cryptocurrency market is currently undergoing volatility, with investors exercising caution in their investment choices.
Conclusion
The reasons behind Bitcoin’s price decrease are a combination of geopolitical issues, market corrections, liquidation of long-term investments, and sales from Bitcoin ETFs. While these events may cause temporary anxiety, Bitcoin’s future perspective is positive as the market copes with these hurdles. It is crucial for investors to stay informed and exercise caution when dealing with the volatile nature of cryptocurrencies.
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2024-04-16 11:14