Bitcoin Drops Below $56K: Key Reasons Behind the Market Decline
Bitcoin has once more experienced a major drop, dropping to below $56 000 and going as low as $55 600 this week. In a recent post on X, popular crypto analyst Ash Crypto explained the reasons for another fall of BTC. This decline is mainly attributed to worldwide economic factors such as stock market crashes and market liquidations, which are not good signs for Bitcoin in September.
The U.S. stock market crash is one of the main reasons that caused the recent Bitcoin dip. In the same day, BTC dropped, and S&P 500 declined by 2. The Dow Jones Industrial Average fell slightly by 0.1%, while the Nasdaq dropped by 3.26%.
Tech major Nvidia was the worst affected, with its market capitalization declining by almost $10 billion after it received a subpoena from the US Department of Justice. These declines can be partially linked to a general economic recession, particularly in relation to employment, leading to investors hesitance in different markets, including cryptocurrencies.
Japans Setback Hits Bitcoin
Besides the U.S. market problems, Japans stock market also suffered a great setback. The YEN carry trade, a strategy that is used in the world currency market is being unwound, which is putting more pressure on the global financial markets. This has an effect on BTC and other digital assets and adding more pressure to the downside.
Another key reason behind this decline of BTC is the outflow from Bitcoin ETFs. In the last 24 hours, Bitcoin ETFs recorded the biggest outflow in the past four months amounting to $288 million. This selling pressure has therefore been boosted by investors fund withdrawal from the market due to the existing fears. In the past day, BTC is down by 4.38% and sits at $56,553, according to CoinMarketCap data.
Also, the wave of liquidation has hit the BTC market in the recent past. In the last 24 hours alone, $170 million worth of long positions were liquidated and this led to exchanges having to sell off a lot of Bitcoin hence accelerating the price drop. Such sales are rather common and often lead to a negative feedback, which means that the price will fall even more.
At the end of September, the situation remains rather unpredictable for Bitcoin and other cryptocurrencies. Ash Crypto pointed out that September has always been a volatile month for Bitcoin, but the hope is that Q4 could be a bit of a comeback. Everyone is now waiting and seeing, hoping that Bitcoin will not break new lows before the fourth quarter of the year.
Read more: https://www.tronweekly.com/bitcoin-drops-below-56k-key-reasons-behind-the/
Text source: TronWeekly
