Bitcoin’s Price Plummets 10% in Two Days, Dropping from $64,000 to $58,000
Bitcoin has recently experienced a significant drop in value, falling from a price exceeding $64,000 on Monday to as low as $58,000 yesterday, representing a 10% decrease over a two-day period. This sudden decline has sparked worry within the cryptocurrency community, leading to various interpretations of the market’s actions.
A recent report from CryptoQuant, a platform providing on-chain data, has shed light on five crucial factors that may have contributed to this price decrease. CryptoQuant’s analysis has identified five key charts that demonstrate the market conditions leading up to and during the recent downturn.
One of the primary factors highlighted by CryptoQuant is the impact of short-term holders in establishing a resistance level at their break-even point. These holders experienced an average loss of 17% earlier this month when Bitcoin’s price sharply dropped. Upon the price rebounding to their break-even threshold, these holders opted to sell, creating resistance that hindered further upward movement.
Aside from the behavior of short-term holders, the report also emphasizes the fragile environment fostered by traders speculating on higher prices. The open interest in Bitcoin futures surged from $13.5 billion to $17.9 billion, marking a 31% increase since August 5th. Positive funding rates indicated a premium on perpetual contracts, reflecting traders’ expectations of continued price hikes. However, this optimism led to a precarious situation where any negative price movement could trigger significant instability in traders’ positions.
The report also points out a rise in spot inflows during the price decline, indicating that large holders were transferring their Bitcoin to exchanges, potentially for selling purposes. This influx of selling pressure exacerbated the delicate conditions in the futures market.
As the price continued to decline, long positions in both Bitcoin and Ethereum were liquidated at high levels, amounting to $90 million for Bitcoin and $55 million for Ethereum. These liquidations, the most substantial since August 5th, reduced open interest by $2.2 billion, further unsettling the market.
In conclusion, CryptoQuant stated that the recent price drop was influenced by the factors outlined. The market now requires time to stabilize, with a need to monitor on-chain data in the upcoming days. In the last 24 hours, Bitcoin has continued its decline, currently down by 3.2% with a trading price of $59,841 at the time of writing.
