Why did Bitcoin plummet? How far will it drop?
Bitcoin, the largest cryptocurrency by market value globally, has recently seen a continuous decline in price, attracting widespread attention from the crypto market. There are many speculations about this round of decline. Some say it is related to the already bankrupt cryptocurrency exchange Mt.Gox, while others attribute it to the anti-cryptocurrency stance of Federal Reserve Chairman Jerome Powell.
First, let's talk about Mt.Gox. On December 19, 2024, there were reports that Mt.Gox distributed 100 million dollars' worth of Bitcoin to creditors. It is said that this money was transferred to three different wallets, with each wallet receiving over 30 million dollars' worth of Bitcoin.
The Mt.Gox compensation could be a reason because with so many Bitcoins being distributed to creditors, there is bound to be significant selling pressure in the market. Although it is still unclear when the distribution will happen, once it does, the price of Bitcoin is likely to drop further.
Now, regarding Powell's stance. Recently, he announced a rate cut, but when it comes to cryptocurrencies, he is quite firm. In an interview, he clearly stated that they do not allow holding Bitcoin and do not intend to change the law. Following this statement, the entire cryptocurrency market also saw a decline.
In addition to these two reasons, there is also a technical factor. The key support level for Bitcoin has been breached.
After this crash, Bitcoin's price dropped by 6.5%, but it found support at the $92,500 level and is now starting to rise again. However, if the $92,500 support level fails to hold, Bitcoin may drop to $85,500. Of course, if the support level holds, the upward momentum may continue.
Speaking of which, in the past three days, Bitcoin has plummeted by 14%, from $106,600 all the way down to $92,600. This drop has caused Bitcoin to fall below the key support level that has been maintained since early November 2024.
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