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Why is Bitcoin falling today? – Forbes Advisor
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Bitcoin (BTC) and other cryptocurrencies saw rapid declines in morning trading today. While BTC is still up more than 50% year-to-date, the world’s oldest cryptocurrency has fallen more than 6% in the past 24 hours.
This means that bitcoin, which has risen to new all-time highs above $73,000 in recent weeks, has returned to $65,000. This is a psychological obstacle that he has been trying to overcome for almost the entire “crypto winter” of 2022 and 2023.
Ethereum (ETH), the world’s leading altcoin, also fell by more than 7% in the last 24 hours, bringing the price of ETH back to $3,200. This was also an obstacle that Ethereum spent nearly two years trying to overcome after the cryptocurrency winter began in April 2022.
The drop in Bitcoin prices has affected almost the entire cryptosphere. Other major altcoins are also declining. Solana (SOL) loses 9%. BNB Coin (BNB) loses 6%. XRP (XRP) is down 4%. Cardano (ADA) is down more than 6% and Avalanche (AVAX) is down 10%.
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Why is Bitcoin falling today?
Bitcoin’s price decline today appears to have been triggered by strong US factory data that sent the US dollar index above 105.00 for the first time in almost five months.
The U.S. Dollar Index measures the strength of the U.S. dollar relative to other major global currencies, such as the Japanese Yen (JPY), British Pound (GBP), Euro (EUR), and more. This morning’s rise above 105.00 shows that the dollar is strengthening against other global currencies.
Yesterday, the Institute for Supply Management released its March purchasing managers’ index, or PMI, which came in at 50.3%, up 2.5 percentage points from February’s 47.8%.
Stronger data on US factories could lead to strengthening US exports, which would help the dollar’s strength against other global currencies. A stronger dollar could hinder bitcoin’s recent strong performance.
Bitcoin has been in a bull market since November
Bitcoin has been on a major bull run since November last year. It went from $34,000 at the end of October to more than $73,000 in March.
After the United States Securities and Exchange Commission approved 11 new bitcoin spot exchange-traded funds on January 10, bitcoin has been on an uptrend, gaining more than 50% this year alone.
ETFs, like mutual funds, are baskets of securities that investors can trade as a single investment. However, unlike mutual funds, ETFs trade directly on exchanges throughout the market day.
Cryptocurrencies themselves are traded 24/7 because, unlike stocks and commodities, the cryptocurrency market is not a regulated exchange. It occurs through a decentralized network of computers.
Bitcoin ETFs, whether spot or futures-focused, trade only during market hours.
A spot ETF differs from a futures ETF in that a spot ETF tracks the current price of the underlying asset, while a futures ETF tracks potential future prices of the underlying asset.
Futures ETFs deal with the trading of futures, which are complex derivative products best suited for direct trading by experienced investors only.
Is cryptocurrency a safe investment?
Cryptocurrency markets saw a stunning recovery in 2023, with Bitcoin finishing the year up 156%. According to many investors, this rebound ended the cryptocurrency winter of 2022, exemplified by the rapid collapse of FTX cryptocurrency exchange in November 2022.
Following the collapse of FTX and other circumstances, US regulators have cracked down on exchanges and other companies that trade and create cryptocurrencies.
SEC Chairman Gary Gensler has said in the past that his agency believes that most cryptocurrencies are actually securities and therefore fall under a plethora of existing rules and legal precedents.
This claim was further asserted in documents filed by the SEC against a handful of cryptocurrency exchanges and companies, including Binance and Coinbase—alleging that these entities were engaged in the sale and transfer of securities without a license.
However, Gensler and the SEC also said that bitcoin itself is likely a commodity, not a security, and should be regulated by the CFTC, not the SEC.
With today’s price drop, bitcoin’s current price is around $65,000, which is more than 12% below its new all-time high of $73,750, set last month.