The cryptocurrency market recently experienced one of its biggest declines since November 2022, causing concern among investors and enthusiasts. In this article, we will look at the factors that contributed to Bitcoin's recent decline and its implications for the future of the cryptocurrency market.
Factors influencing the fall
1. The influence of SpaceX and Elon Musk
One of the decisive events that caused the coin to drop significantly was the news about SpaceX, Elon Musk’s company. SpaceX reportedly sold $373 million worth of #ВТС purchased in 2021-2022. However, it is impossible to say unequivocally that this could be the reason for the sharp drop: there was no official confirmation of the sale online.
The catalyst rather lies in the context of a general decline in financial assets against the backdrop of rising interest rates and the bankruptcy of Evergrande (with a general slowdown in the Chinese economy), and an article by The Wall Street Journal with rumors of Elon Musk’s SpaceX selling its bitcoins was only a trigger.
2. Liquidation
Against the backdrop of a sharp drop in #биткоина , traders began to take action. On August 18, more than 176 thousand traders liquidated contracts worth $1.04 billion. It is known that most traders traded in long positions, so they had to sell at a loss in order to save funds. This influenced the further fall of Bitcoin. The “pioneer” movement was repeated by all other coins on the market.
3. Connection with the global stock market
Global stock market losses played a significant role in the cryptocurrency's sharp decline. Due to the difficult economic situation in China, the MSCI World Index showed a sharp decline. This was influenced by news of the bankruptcy of a large Chinese developer, Evergrande. There are rumors that China's Central Bank may devalue the yuan to stimulate economic growth. These measures may negatively impact the crypto market in the short term.
The MSCI World Index is a broad global equity index that reflects the performance of large and mid-caps in all 23 advanced economies. It covers approximately 85% of each country's free-float-adjusted market capitalization.
4. Technical indicators
Technical indicators of the cryptocurrency market also reflect current challenges. A potential head and shoulders pattern is forming on the weekly chart. This pattern is an indicator of a bearish reversal pattern, which is usually confirmed after the price moves below the support line or neckline. The cryptocurrency market tested the neckline of the head and shoulders pattern on August 18, suggesting a possible downward move.
Недельный график динамики криптовалютного рынка. Источник: TradingView
According to analysis by Delphi Digital, Bitcoin price dynamics are beginning to mirror the pre-bull BTC market cycle of 2015-2017.
Therefore, do not let short-term market movements and emotions overshadow your macro vision, which today, like six months ago (and before), has never failed. The crypto market needs time.
Consequences of a fall
The fall of the cryptocurrency market has raised many questions about its consequences and the future of the market. However, many traders and researchers emphasize that this is only a short-term perspective. Bitcoin has suffered a “shaking”, but this is absolutely normal. Since other assets of the crypto market always follow the movement of Bitcoin, their fall is also quite understandable.
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Ссылки на источники:
SpaceX продала ВТС https://cointelegraph.com/news/spacex-sold-bitcoin-acquired-2021-2022-report
Статья The Wall Street Journal https://www.wsj.com/tech/behind-the-curtain-of-elon-musks-secretive-spacex-revenue-growth-and-rising-costs-2c828e2b?ref=metatalks.ai
Банкротство китайского застройщика Evergrande https://www.interfax.ru/business/916781
Индекс MSCI World https://investfunds.ru/indexes/25281/
Динамика цен ВТС https://cointelegraph.com/news/bitcoin-price-action-mirror-2015-2017-pre-bull-market-cycle