Reasons Why Bitcoin Dropped to $60K After Weekend Surge
Bitcoin price dropped to $60,000 today, sparking concerns in the broader crypto market. Following the downtrend in BTC price, several other major cryptocurrencies also witnessed declines today.
But it’s the potential reason behind the recent decline that has caught the market’s attention, and the debate is particularly intense after Bitcoin’s recent rally over the weekend.
Why Did Bitcoin Drop to $60K Today?
The recent drop in Bitcoin price to $60,000 has left the crypto world in shock. But amidst all this, a new report by 10X Research sheds light on the key factors driving the flagship cryptocurrency’s slow performance.
Their report states that the weekend pump was likely a technical reset, easing the oversold conditions in the short term. This reset paved the way for the downtrend to continue as longer-term technical signals point to a potential top forming.
In addition, the report suggests that despite the short-term bullish trend stemming from factors such as the US Presidential Election headwinds and expected interest rate cuts, these are overshadowed by deeper technical and structural concerns. Analysts from 10X Research highlight the important role of on-chain signals in this crisis, particularly market flows and market structure data from Bitcoin miners’ inventory.
These factors collectively contributed to the bearish sentiment for Bitcoin, outweighing the temporary bullish influences. Also notable was the impact of low trading volumes over the weekend.
During these periods, even modest buying activity can trigger stop orders, leading to liquidations and further price action. This phenomenon was evident in the recent weekend rally, which quickly turned into a correction as the upside risk from short covering diminished and downside pressures took over.
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What else?
Another major reason for Bitcoin’s price decline is the approaching expiration of significant Bitcoin and Ethereum options. Data from Deribit shows that Bitcoin options with a notional value of over $1.04 billion will expire on July 5, with a put/call ratio of 0.80 and a maximum pain price of $63,000.
Source: Deribit
Meanwhile, $479.30 million worth of Ethereum options with a put/call ratio of 0.38 and a maximum pain price of $3,450 are also set to expire on the same date. These expirations create uncertainty and prompt traders to adjust their positions ahead of the expiration date. The approach of the expiration period increases market volatility as participants hedge their bets and readjust their strategies in response to significant expiring options contracts.
Source: Deribit
In addition, the outflow in the US Spot Bitcoin ETF on July 2 after a five-day winning streak also weighed on investor sentiment. According to the latest data, US Spot Bitcoin ETFs recorded an outflow of around $14 million on Tuesday, following an inflow of around $130 million the previous day.
Are More Purges Ahead?
Many market experts appear to remain bullish despite today’s decline, but it’s worth noting that liquidation warnings from 10X Research and other leading analysts are weighing on this sentiment.
For context, Ali Martinez said that Bitcoin could rebound from its current phase while issuing a warning. While analyzing the Bitcoin Exchange Liquidation Map, Martinez said that BTC risks witnessing liquidations worth over $1 billion if it reaches the $62,600 level.
Source: Ali Martinez, X
As of press time, Bitcoin is down more than 3% and is trading near the $60,500 range. One-day trading volumes rose 7% to $23.54 billion, while the crypto hit a 24-hour high of $63,015.03. CoinGlass data also showed a more than 4% drop in Bitcoin Futures Open Interest compared to yesterday.
Also Read: Binance Announces Delisting of Major Crypto Pairs, Maintains Market Influence
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A seasoned professional who has worked in the financial market for 3 years, Rupam has honed his skills as a meticulous research analyst and insightful journalist. He enjoys exploring the dynamic nuances of the financial landscape. Currently working as a sub-editor at Coingape, Rupam’s expertise extends beyond traditional boundaries. His contributions include breaking news, examining AI developments, providing real-time crypto market updates, and delivering insightful economic news. Rupam’s journey is marked by his passion for demystifying the intricacies of finance and delivering impactful stories that resonate with different audiences.
The content presented may include the author’s personal opinion and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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