Why Is Bitcoin Price Dropping Sharply Today?
Bitcoin price experienced a significant decline today and fell below the $67,000 level; This is in stark contrast to its previous price of $70,000. In particular, this recent decline in Bitcoin’s value can be attributed to a number of factors affecting broader cryptocurrency market trends.
Source: CoinMarketCap
Factors Affecting Bitcoin’s Price Drop
Today’s decline in Bitcoin price can be primarily attributed to the S&P Global Purchasing Managers Index (PMI) report suggesting that the US economy is hot. This caused a rise in the dollar, which in turn put pressure on risky assets such as cryptocurrencies.
The PMI report reported that the economy was growing at the fastest pace in the last two years, which caused investors to change their expectations for interest rate cuts, which put further pressure on Bitcoin and other digital currencies.
At the same time, there are expectations regarding the US Securities and Exchange Commission’s (SEC) decision regarding spot ether (ETH) exchange-traded funds (ETFs). This may be because market participants are monitoring decisions that could significantly affect the market. Crypto analyst Kaleo said the market reaction could be harsh depending on the decision taken. she said
Crypto Market Sentiment and Regulatory Environment
The cryptocurrency market is also affected by regulatory news and overall market sentiment. The SEC has been fairly conservative in its response to the crypto bill recently approved by the House of Representatives.
SEC Chairman Gary Gensler stated that the agency is ready for dialogue but will continue to enforce the law to ensure token operators provide helpful and legally required disclosures to investors.
Apart from regulatory issues, other factors that appear to be causing the decline include large sell orders in the market. For example, trading firm Sembolic Capital Partners sold 6,968 ETH worth $27 million in one minute, resulting in increased selling pressure in the market.
ETH Price Performance and Market Speculations
The expectation regarding the SEC’s decision is also seen in the context of the “buy the rumor, sell the news” phenomenon observed in financial markets. This behavior, where prices rise in anticipation of an event and fall after the event occurs, is common in the crypto market.
Simultaneously, the Ethereum market this week has been highly volatile, with ETH prices rising more than 22% in anticipation of ETF approval. This was marked by short squeezes and heavy buying, causing large price fluctuations in the market.
Source: CryptoQuant
CryptoQuant also reported that the ETH futures market was highly active, with total open interest reaching 3.2 million ETH ($11 billion), the highest since January 2023. One of the biggest hourly liquidations of the year with 9.3 thousand ETH.
Additionally, the ETH-BTC Open Interest rate increased from 0.54 to 0.67, indicating that more investors are turning to Ethereum rather than Bitcoin. Additionally, the discount on the ETHE fund fell to a two-month low of 17%, indicating increased interest among investors in Ethereum over Bitcoin.
Also Read: XRP Price Prediction: Monumental Bull Run Possible as Coinbase Begins XRP Trading in New York
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Kelvin is a distinguished author specializing in crypto and finance, with a bachelor’s degree in Actuarial Science. Known for her sharp analysis and insightful content, she is fluent in English and specializes in comprehensive research and on-time delivery.
The content presented may contain the personal opinion of the author 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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