Bitcoin, the largest cryptocurrency in the world by market capitalization, is attracting significant attention from the cryptocurrency community after the price has been continuously declining. However, there is some speculation about this price drop. Some believe it may be related to the defunct cryptocurrency exchange Mt. Gox, while others suggest it relates to the anti-cryptocurrency stance of Fed Chairman Jerome Powell.
The reason behind the Bitcoin price collapse
On December 19, 2024, Mt. Gox is reported to have distributed $100 million in Bitcoin. Reports indicate that the company has transferred this significant amount of BTC to three different wallet addresses, each receiving $30.18 million in Bitcoin.
Payments from Mt. Gox
The underlying reason for the selling pressure created by Mt. Gox is the distribution of billions of dollars worth of BTC to creditors, an event expected to occur in the coming days. However, the exact timeline is still unknown. If this distribution occurs, the recent price drop may be less severe than before and we could see the price of Bitcoin decline significantly.
Jerome Powell's stance adds further pressure
Another underlying reason for the recent price drop is the anti-cryptocurrency stance of Fed Chairman Jerome Powell in the interest rate cut announcement. In an interview, Powell made a bold statement that garnered significant attention from the cryptocurrency community.
He stated, "We are not allowed to own Bitcoin, and we have no desire to change the law." Following this statement, the price of the entire cryptocurrency market dropped.
Technical analysis of Bitcoin (BTC) and upcoming levels
In addition to these two speculations, another underlying reason behind this significant price drop is the breakdown of a key support level. According to technical analysis by CoinPedia, BTC has broken below an ascending support level, a level it has maintained since early November 2024.
After this incident, the price of BTC has dropped 6.5% but has found support at a horizontal level of $92,500 and is currently starting to rise. Based on recent price action, if BTC cannot hold this level, there is a high likelihood that it could drop to $85,500. However, if support holds, the upward momentum is likely to continue.
In the last three days, BTC has dropped over 14%, with the price falling from $106,600 to $92,600. This significant drop has caused BTC to break below an important ascending support level, which had remained intact since early November 2024.
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