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During the Saturday trading session, the crypto market took a bearish turnaround, as the Bitcoin price fell 0.32% and breached below the $63,000 level momentarily. Selling pressure can occasionally be an occasional pullback for buyers to recover the exhausted bullish momentum. However, the high-leveraged BTC’s long position faces liquidation risk, which could further accelerate the supply pressure.
Key Reasons Behind Today’s Crypto Market Downturn
In the last two weeks, the Bitcoin price showcased a notable recovery from $53,630 to $63,010, accounting for 17.5% growth. The bullish narrative was largely driven by the crypto market speculation on the Fed rate cut, which now settled at 475-500 basis points (BPS), replenishing the investor interest in risky assets.
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Amid this rally, Bitcoin’s estimated leverage ratio spiked to a yearly high of 0.21%, indicating increased leverage positions relative to open interest. Historically, the rising leverage position often leads to highlighted market volatility as the traders bet on a directional move.
Thus, the attempt to stabilize the BTC price above $63,000 has raised the liquidation risk of aggressive buyers, contributing to today’s selling pressure.
According to a recent tweet from Arkham Intelligence, 250 BTC (worth approximately $15.95 Million) were moved by five addresses belonging to the ‘Satoshi era.’ These Bitcoin addresses were dormant for 16 years and received 50 BTC each for mining one of Blocks 224, 2401, 2455, 2486, and 2690. While it’s unclear if these addresses belong to the same person, such crypto transactions often lead to market speculation and surge volatility.
Furthermore, the Santiment analytics also highlight a sudden spike in the Positive vs Negative sentiment ratio following the first rate cut in four and half years. This positive ratio signals an overly optimistic scenario during a crypto market rally, often leading to a counter-trend bearish move.
In addition, the renowned trader Martinez Ali displays a pivotal moment for Bitcoin price as it retests the 200-day SMA line. Historically, the BTC crypto price failure to reclaim this level has triggered a notable correction, as observed in 2020, 2018, and 2014. Thus, the overhead supply has stalled the recovery momentum in the pioneer cryptocurrency and the broader market.
Conclusion
Despite the downfall in the short-term, the bull run in the Bitcoin price is likely to continue in the next week. Further, the crypto sentiments are uplifting, with the ETF market marking a second consecutive bullish week with $700M in inflows in two weeks.
Curious if Bitcoin will hit $100K in 2024? Find out now in Coinpedia’s Bitcoin Price Prediction for 2024 and years ahead.