Bitcoin faced another dip while attempting to recover from a 5% drop on October 1, leaving the crypto community surprised with an additional 5.9% decline. This fall brought the price of Bitcoin down to $60,200. The question now is whether Bitcoin might drop even further. Letâs examine the situation.
Analyzing the Chart
Before diving into the causes of this crash, letâs look at what the charts reveal. Bitcoin had managed to hold a support level above $65,500, but significant selling pressure led to a consolidation zone. As the last day of September, a typically bearish month, arrived, the optimism in the market pushed Bitcoin higher but eventually backfired when it became overbought. This overconfidence gave sellers an opportunity to push prices lower.
As Bitcoin fell below the support zone, panic set in, causing many investors to sell. The price found support around the $62,800 level, which allowed it to rebound, but the resistance at $64,000 proved too strong, causing further declines. The next major support came from the 200-day moving average at $60,200. Along with these technical factors, there were two key external reasons for the decline.
Key External Factors Behind Bitcoin's Crash
Two major non-market reasons contributed to Bitcoin's crash on October 1: statements by U.S. Federal Reserve Chair Jerome Powell and the Israel-Iran conflict.
Jerome Powell indicated that the Federal Reserve is aiming to bring interest rates to a neutral level, but this will take time. He also emphasized that there are no plans for significant rate cuts in the near future, hinting that such changes are unlikely during the next Federal Reserve meeting on November 6-7, 2024. This dampened market sentiment as investors had hoped for potential rate cuts.
Additionally, the escalating conflict between Israel and Iran has sent shockwaves through global markets. Iran's cruise missile attack on Israel caused significant destruction, impacting both regional and international stability. Wars of this magnitude typically disrupt global markets, and this conflict is no exception.
Looking Ahead
If youâve been in the market for a while, you would be aware of the impact that major conflicts can have on both traditional and cryptocurrency markets. The previous crash occurred during Russia's invasion of Ukraine, and now the Israel-Iran conflict is having a similar effect. Bitcoin has been attempting to recover from this latest crash, but it appears more downside may be ahead. If conditions do not improve, Bitcoin could potentially fall to $53,600. Investors and traders should remain cautious.
