Why Bitcoin Is Falling: What’s Behind The $BTC Drop
Why Is The Bitcoin Going Down: Key Factors Behind the Recent Crash
Crypto Market Experiences High Volatility Amid Major Liquidations
The cryptocurrency market has witnessed heightened volatility over the past 24 hours, with liquidations surpassing $518 million. Bitcoin, the largest cryptocurrency, is facing strong resistance near the $100,000 mark, trading below $95,000 after a 4% drop in the last day. Investors are gearing up for the release of critical economic indicators this week, which could further influence market movements.
Bitcoin Struggles Below $95K Despite Institutional Buying
Bitcoin’s recent dip comes in the wake of MicroStrategy’s announcement of a $5.4 billion Bitcoin purchase, increasing its total holdings to approximately 386,500 BTC, valued at $22 billion. Despite this bullish move, the crypto asset’s price remains under pressure as market sentiment wavers.
Coinbase Premium Indicates Weakening Demand
Demand from U.S. investors, a key driver of Bitcoin’s recent rally from $70,000 to $99,500, has softened. This is evident in the declining Coinbase premium, which shows Bitcoin prices on Coinbase trading at a discount compared to Binance. A bearish order book and a negative shift in the premium indicator point to increased vulnerability to adverse news.
RSI Divergence Signals Potential Downside
A bearish divergence in Bitcoin’s Relative Strength Index (RSI) has emerged, suggesting the bullish momentum may have peaked. While Bitcoin recently touched $99,000, the RSI failed to confirm the high, hinting at a potential price correction. Analysts predict Bitcoin may find support between $87,000 and $88,000 in the event of further declines, with the long-term trend still appearing bullish.
Macroeconomic Events Weigh on Crypto Market
The broader market has also faced pressure due to macroeconomic developments. The announcement of additional tariffs on imports from China, Mexico, and Canada by U.S. President-elect Donald Trump has dampened market optimism. Bitcoin, along with other cryptocurrencies, corrected during early Asian trading hours, coinciding with a rise in the U.S. Dollar Index by 0.7%.
Bitcoin Price Volatility Ahead of Options Expiry
The upcoming expiry of $9.4 billion worth of Bitcoin options on Friday is expected to increase market volatility. According to Deribit data, the put/call ratio is at 0.83, with the max pain point at $78,000. Daily trading volume for Bitcoin options surged 124% to $4.47 billion, while open interest grew 2% to $42.6 billion, signaling heightened market activity.
Key Economic Indicators to Shape Crypto Prices
This week’s release of key U.S. economic data, including PCE inflation figures, FOMC meeting minutes, and Q3 GDP results, is expected to impact the cryptocurrency market. Investors are closely monitoring these updates for insights into the broader economic outlook and their potential effects on asset prices.
What’s Next for Bitcoin?
Despite the recent pullback, analysts maintain that Bitcoin’s long-term bullish trend remains intact. Current support is being tested around $94,000 to $95,000, with potential downside risks toward $88,000 if the level fails. However, any decline is expected to be temporary, with the weekly chart reflecting bullish momentum reminiscent of October 2023, a period marked by significant price surges.
