Why Bitcoin Drops to $58K Today; Further Drop Expected?

Bitcoin price dropped below the $59,000 mark today, sparking concerns in the broader market cryptocurrency marketAmid the downward trend in BTC price, other major cryptocurrencies such as Ethereum, BNB, and others have also seen significant declines.

However, amid the recent decline, investors are looking for potential reasons behind the decline. Furthermore, the discussions are intensifying further, especially after Bitcoin’s recent surge over the weekend.

Why is Bitcoin dropping to $60,000 today?

The recent drop in the price of Bitcoin to $60,000 has caused a stir around the world cryptocurrency panorama. However, amidst all this, a new report from 10X Research sheds light on the key factors driving this sluggish performance in the flagship cryptocurrency.

Their report emphasizes that the weekend pump was likely a technical reset, which has alleviated the oversold conditions in the short term. This reset has paved the way for the resumption of the downtrend, as long-term technical signals point to a potential topping formation.

Furthermore, the report suggests that despite short-term bullish sentiments driven by factors such as United States Presidential Election tailwinds and expected interest rate cuts, these have been overshadowed by deeper technical and structural concerns. Analysts at Search 10X highlight the significant role of on-chain signals, market flows, in particular from Bitcoin Miners Inventoryand data on the structure of the market in this recession phase.

These factors have collectively contributed to a bearish outlook for Bitcoin, outweighing temporary bullish influences. Additionally, a key aspect noted was the impact of low trading volumes over the weekend.

During these times, even modest buying activity can trigger stop orders, leading to liquidations and amplifying price moves. This phenomenon was evident in the recent weekend rally, which quickly turned into a correction, as upside risk from short covering diminished and downside pressures took hold.

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What’s more?

Another significant factor in the Bitcoin price decline is the impending expiration of substantial Bitcoin and Ethereum options. Deribit data indicates that Bitcoin options with a notional value of more than $1.04 billion are set to expire on July 5, with a put/call ratio of 0.80 and a maximum pain price of $63,000.

Source: Deribit

On the other hand, Ethereum options worth $479.30 million, with a put/call ratio of 0.38 and a maximum pain price of $3,450, also expire on the same date. These expirations are generating uncertainty, prompting traders to adjust their positions ahead of expiration. The approaching expiration date increases market volatility as participants hedge their bets and recalibrate strategies in response to the significant options contracts that are about to expire.

Source: Deribit

Furthermore, the outflow of July 2 in the US Spot Bitcoin ETFs after a five-day winning streak has also weighed on investor sentiment. According to recent data, U.S. Spot Bitcoin ETFs saw an outflow of nearly $14 million on Tuesday, following an inflow of about $130 million the previous day.

Further liquidations in sight?

Several market experts seem to have remained bullish despite today’s plunge. However, it is worth noting that the liquidation warning from 10X Research and other top analysts has weighed on sentiment.

For context, Ali Martinez said that Bitcoin could recover from its current phase, revealing a warning. Martinez, while analyzing the Bitcoin Exchange Liquidation Map, said that BTC is at risk of seeing more than $1 billion in liquidation if it hits the $62,600 level.

Source: Ali Martinez, X

At the time of writing, Bitcoin Price has fallen more than 3% and is hovering around $58,500. Its daily trading volume has increased by 48% to $33.67 billion, while the cryptocurrency has hit a 24-hour high of $61,079.38. Additionally, CoinGlass data showed a more than 4% drop in Bitcoin futures open interest since yesterday.

Read also: Binance Announces Delisting of Major Crypto Pairs, Brace Yourself for Market Impact

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