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Why is the price of Bitcoin dropping dramatically today?
Bitcoin (BTC) has seen a significant decline, falling below the $68,000 mark, in stark contrast to its previous price of around $70,000. This decline That of Bitcoin the value can be attributed to several key factors that have influenced the broader cryptocurrency market.
Source: CoinMarketCap
Factors influencing the decline in Bitcoin prices
Today’s pullback in Bitcoin price can be mainly attributed to the S&P Global Purchasing Managers’ Index (PMI) report suggesting a hot US economy. This led to a surge in the dollar which in turn put pressure on risk assets such as cryptocurrencies.
In the PMI report, it was reported that the economy is growing at the fastest pace in two years, which has caused traders to shift their expectations of interest rate cuts, thus putting more pressure on Bitcoin and other currencies digital.
At the same time, there is anticipation for the US Securities and Exchange Commission (SEC) decision on Spot Ether (ETH) Exchange Traded Funds (ETFs). This could be because market participants are looking for decisions that could significantly influence the market. Crypto analyst Kaleo said the market reaction could be drastic depending on the decision made. He said
“If the ETH ETF could be in denial today, I wouldn’t be surprised to see prices rise as violently as they fell the other day.”
Cryptocurrency market sentiment and regulatory landscape
The cryptocurrency market is also influenced by regulatory news and general market sentiment. The SEC has been quite conservative in its response to the cryptocurrency bill recently passed by the House of Representatives.
Chairman of the SEC Gary Gensler stressed that the agency is ready for dialogue but will continue to enforce the law to ensure that token operators provide information that is useful to investors and required by law.
Besides regulatory issues, other factors that led to the decline include large sell orders in the market. For example, trading firm Symbolic Capital Partner sold 6,968 ETH worth $27 million in just one minute, which led to increased selling pressure in the market.
ETH price trends and market speculation
The anticipation surrounding the SEC’s decision also comes within 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 prevalent in the cryptocurrency market.
At the same time, this week, the Ethereum market has been quite volatile and ETH prices have increased by more than 22% in anticipation of the ETF approval. This was characterized by a short squeeze and intense buying that was instrumental in causing large price swings in the market.
Source: CryptoQuant
CryptoQuant also reports that the ETH futures the market has been quite active with total open interest reaching 3.2 million ETH, worth $11 billion, the highest since January 2023. This increase is mainly due to strong buy orders pushing up The price was high which led to one of the largest hourly liquidations of the year with 9.3K ETH.
Furthermore, the ETH-BTC open interest ratio also increased from 0.54 to 0.67, suggesting that more investors are leaning towards Ethereum than Bitcoin. Furthermore, the discount on the ETHE fund further narrowed to 17%, the lowest in two months, indicating greater interest in Ethereum than Bitcoin among investors.
Read also: XRP Price Prediction: Monumental Bull Run Likely as Coinbase Starts XRP Trading in New York