Why is Bitcoin Price Crashing? 3 Reasons Why This is Happening
The value of cryptocurrency markets dropped because Bitcoin, the biggest digital currency, dropped below $40,000. This happened for the first time since the launch of a new type of investment called the spot Bitcoin exchange-traded fund (ETF) on January 11th. Why is Bitcoin price crashing and will it crash to 20K? Lets take a look at this in more detail.
How has the Bitcoin Price price moved in recent days?
As of today, the price of Bitcoin is $38,570, and in the last 24 hours, it went down by 5.40%. The total trading volume on the last day was $59.92 billion, with a market cap of $757.86 billion. Bitcoins market dominance is 50.07%.
The highest price Bitcoin ever reached was $68,770 on November 10, 2021, and its lowest was $0.050000 on July 17, 2010. After reaching its all-time high, the lowest it dropped to was $15,599. The highest price since that low point was $48,941. Currently, predictions suggest a bearish sentiment for Bitcoin, and the Fear & Greed Index is at 50, indicating a neutral stance.
There are currently 19.61 million Bitcoins in circulation out of a maximum supply of 21.00 million. The yearly supply inflation rate is 2.03%, resulting in the creation of 389,143 new BTC in the last year. Bitcoin holds the top position in both the Proof-of-Work Coins and Layer 1 sectors in terms of market cap.
Why is Bitcoin Price Crashing?
The cryptocurrency market is going through a big drop today, and there are several reasons for it.
Reason 1
One significant factor is the large sell-off of Bitcoin by Grayscale, a well-known cryptocurrency investment company. They sold off about $5 billion worth of Bitcoin assets over the weekend, putting extra pressure on the market to sell.
In addition to Grayscales sell-off, the situation is worsened by day traders and hedge funds who are betting on the prices of cryptocurrencies going down. These market players engage in short selling, trying to make a profit from the falling prices. All these factors combined are contributing to a widespread sell-off in the cryptocurrency market.
Reason 2
Another factor impacting the cryptocurrency market is the substantial sell-off by FTX, amounting to nearly $1 billion worth of Grayscales Bitcoin Trust (GBTC) shares. FTX, which is currently undergoing bankruptcy proceedings, sold off all 22 million GBTC shares to fulfill its obligations to creditors.
While this move is essential for FTXs financial restructuring during bankruptcy, it has raised concerns about the overall stability of the market. The significant selloff by FTX has added to the uncertainty and contributed to the challenges facing the cryptocurrency market at the moment.
Reason 3
Another factor influencing the cryptocurrency market is the anticipation and response to important economic data releases. As the week progresses, investors are closely watching crucial economic indicators, such as the U.S. GDP for Q4 2023 and PCE inflation data. Additionally, upcoming indicators like the Consumer Price Index (CPI) in the following week are expected to provide insights into the overall health of the U.S. economy.
Investors are particularly sensitive to any potential changes in the Federal Reserves stance. While the expectation is for three rate cuts in 2024, if the Federal Reserve takes a more aggressive strategy, deviating from the anticipated rate cuts, it could lead to additional selling pressure in the cryptocurrency market. The market is responsive to shifts in the broader economic landscape, and any unexpected moves by the Federal Reserve can influence investor sentiment and trigger further sell-offs in the crypto space.
Will Bitcoin Crash to $20,000?
Now, the big question is whether the price of Bitcoin will stay above 38,000 because thats the next important level of support after dropping from the round number of 40,000. If it goes below 38,000, the next level to watch is 34,000. The 200-day EMA (Exponential Moving Average) is quickly moving toward that point, and if Bitcoin falls below it, that would be very bad.
If Bitcoin drops below $34,000, it could lead to various outcomes. While it might be a bit unexpected, its not impossible. Its worth noting that now that we have a Bitcoin ETF, institutions can easily bet that the price of Bitcoin will go down. This makes Bitcoin behave more like a regular financial market, similar to an index or something like that. Between the current price and 35,000, we really need to see a bounce (an increase in price) for Bitcoin, or it might not do well for some time. Yet, the next two days are crucial, if the BTC price drops below $32,000 then it could crash to $20,000.
Buy Cryptos with Bitget with the CHEAPEST Fees
Bitget stands out as a reliable crypto exchange. It provides a user-friendly interface, making it easy for both beginners and experienced traders to navigate and make transactions at the lowest fees on the market. To get started with Bitget, you need to create an account, complete the necessary KYC procedures, and then you can begin trading a variety of altcoins available on the platform.
> CLICK HERE TO BUY CRYPTOCURRENCIES <
Read more: https://cryptoticker.io/en/why-is-bitcoin-price-crashing/
Text source: CryptoTicker
