Examining 5 possible reasons for the fall in the price of Bitcoin below 26 thousand dollars

Last night, the price of Bitcoin fell by about 9% in 10 minutes to reach the $25,200 range for the first time in more than a month. SpaceX’s sale of bitcoins, the bankruptcy of a Chinese real estate giant, and fear of rising interest rates are among the reasons analysts have cited for this unusual price drop.

According to Cointelegraph, it seems that analysts have so far not reached a consensus on why the sudden fall in the price of Bitcoin and the entire digital currency market after it. The incident that led to the liquidation of more than 1.04 billion dollars of trading positions in the last day and night.

Selling spacex bitcoins and fear of interest rate increase

Josh Gilbert, a market analyst at eToro, attributed this decline to the possible sale of part or all of SpaceX’s $373 million worth of Bitcoin, which the Wall Street Journal had published a report on on August 17 (August 26).

Whenever a big name in the industry sells Bitcoin, someone as influential as Elon Musk will put pressure on the price.

The sudden drop in Bitcoin price last night occurred about 2.5 hours after the Wall Street Journal report was published.

Gilbert added that the rapid change in market sentiment due to the widespread expectation of interest rate hikes in the coming months from the Federal Reserve could be another reason for this. He explained:

Considering some weak trends in global markets, especially in risky assets, along with the expectation that we will probably see high interest rates for a longer period of time, we could expect a price correction.

He added:

Bitcoin traded in the $29,000 to $30,000 range over the past month and tried to reach higher levels with the release of some good news, which only resulted in an increase in widespread selling pressure.

Rising US government bond yields

Tina Teng, a market analyst at CMC Markets, has a different opinion and considers the recent increase in government bond yields to be the main cause of this fall. He explained:

An increase in the interest of these bonds usually means a decrease in liquidity in all markets. An event that can be the main reason for the fall of the digital currency market.

In addition, Teng noted that the bankruptcy of Chinese real estate giant Evergrande could indirectly contribute to the fall in the price of Bitcoin, but it cannot be the main cause. He explained:

The Evergrande crisis affects the sentiments of the market towards the Chinese economy and investors.

The negative impact of the devaluation of the Chinese yuan on the price of Bitcoin

While Teng does not see the bankruptcy of the Chinese real estate broker as the main reason for the price volatility in Bitcoin, Markus Thielen, head of research at Matrixport, believes that the risk of a devaluation of the Chinese yuan may have played a role in the massive selloff.

The biggest current macroeconomic risk is the depreciation of the Chinese yuan, which has reached its weakest level since 2007.

He explained:

In August 2015, when China devalued the yuan for the last time, the price of Bitcoin fell by 23% over the next two weeks. Before starting a larger uptrend, Bitcoin ended the year up 59% from the level it had fallen to due to the depreciation of the yuan.

Wide sale of whales

Despite the release of other news events that could have been the cause of the recent market crash, a derivatives trader with the nickname TheFlowHorse believes that this could be caused by a large selloff by a whale, which led to more pressure in the derivatives market. He said:

This series of sales was not natural. A great actor with a clear goal passed bail and moved the market; Because the size of the spot market is not comparable with the derivatives market.

According to CoinGlass platform data, more than 373 million long Bitcoin transactions were liquidated in the last 24 hours. The total value of liquidated long transactions during this period, which bet on the rise in the price of digital currencies, has exceeded 836.5 million dollars.

Clarifying that many of the reasons given are pure speculation, Horace added that since news of the possible approval of an Ethereum futures ETF broke moments after the crash, it’s possible that a large fund may be rebalancing its bitcoin position with the intention of cascading. From selling to buying ethereum.

According to market data, the price of Bitcoin has gained about 1.6% in the past few hours and is now trading in the $26,550 range. This price increase appears to be related to the release of the news that several Ethereum futures ETFs were approved by the Securities and Exchange Commission in October.