Bitcoin's price recently experienced a significant drop, which can be attributed to several key factors. One major trigger was the U.S. government's decision to liquidate $240 million worth of Bitcoin. This sale, part of a broader initiative to sell seized assets from criminal investigations, introduced a large volume of Bitcoin into the market. The sudden increase in supply naturally led to a decrease in Bitcoin's price as the market struggled to absorb the influx.

The timing of the U.S. government's sale coincided with Bitcoin reaching an all-time high. This new peak attracted a wave of speculative investments, with many traders taking on leveraged positions in anticipation of continued price increases. However, when Bitcoin's price began to decline from its high, these leveraged positions were quickly liquidated. This led to over $1 billion in crypto liquidations, creating a cascading effect that further accelerated the price drop.

In addition to these market-specific factors, broader economic conditions have also played a role in Bitcoin's recent volatility. The U.S. dollar has strengthened recently due to positive economic data, particularly robust manufacturing activity. A stronger dollar typically reduces the appeal of Bitcoin and other cryptocurrencies, which are often viewed as hedges against dollar weakness and inflation. As the dollar gained strength, many investors shifted their portfolios away from riskier assets like Bitcoin toward more stable investments.

Regulatory developments have added another layer of uncertainty. Increased scrutiny from regulatory bodies in the United States and the European Union has made investors cautious. New regulations aimed at increasing transparency and reducing illicit activities in the cryptocurrency market have created an environment of uncertainty, prompting some investors to pull back from their crypto holdings.

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