Understanding The Reasons Behind Bitcoin's Recent Price Drop
Spot Bitcoin ETFs witnessed high inflows following the launch of Ethereum (ETH) ETFs, while the price of ETH declined. In contrast, Solana (SOL) and Ripple (XRP) performed well
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Bitcoin (BTC), the leading cryptocurrency experienced a notable decline in its price, dropping to roughly ₹53.8 lakh, with an almost 1.6 percent drop in the past 24 hours. This is after a brief recovery period from earlier lows.
One likely reason for the current Bitcoin price drop is the repayment process initiated by the bankrupt exchange Mt. Gox, which began transferring substantial amounts of Bitcoin to its creditors. On July 24, 2024, the exchange moved approximately 37.477K BTC, valued at over $3 billion. This raises concerns about potential market saturation as creditors may decide to sell their holdings. The total distribution from Mt. Gox may reach 1,40,000 BTC, sparking major concerns for asset holders and the fear of large-scale sell-offs.
Another possible significant factor influencing Bitcoin’s price drop is the launch of Hong Kong’s first inverse Bitcoin futures product. This product allows investors to profit from BTC’s price decline and increases the asset sell-off, resulting in downward trends. It further impacts the cryptocurrency’s value, indicating a significant market shift towards a bearish trend. The massive liquidations have further altered the possible bullish trend. Traders with high leverage are coerced to liquidate their positions to cover losses, further lowering BTC prices.
As Bitcoin’s price experiences a downward trajectory, several technical indicators provide critical insights into the market’s bearish sentiment. Experts have implied that BTC’s hourly Moving Average Convergence Divergence (MACD) is gaining pace in the bearish zone. Also, the hourly Relative Strength Index (RSI) for BTC is below the 50 level, indicating that the asset is in oversold territory and that selling pressure is increasing.
Despite the current challenges, there are indications that Bitcoin prices may rebound shortly. Historical patterns and trends suggest that cryptocurrency has often experienced recoveries driven by renewed buying interest after significant liquidations and market corrections.
