Bitcoin (BTC) is the largest cryptocurrency by market cap and has garnered significant attention from the cryptocurrency community after a sustained price decline. However, there are several speculations regarding this price drop. Some believe it may be related to the collapsed cryptocurrency exchange Mt. Gox, while others attribute it to Federal Reserve Chairman Jerome Powell's anti-cryptocurrency stance.
What caused the Bitcoin price to plummet?
On December 19, 2024, Mt. Gox reportedly distributed Bitcoin worth $100 million. Reports indicate that the company transferred this massive BTC to three different wallet addresses, each receiving Bitcoin valued at $30.18 million.
Mt. Gox compensation
The potential reason for the selling pressure caused by Mt. Gox is the distribution of billions of dollars worth of Bitcoin to creditors, an event expected to occur in the coming days. However, the exact timeline remains uncertain. If this distribution happens, the recent price drop may be relatively mitigated, and we could see a significant drop in Bitcoin prices.
Jerome Powell's stance increases pressure
Another potential reason for the recent price drop is Federal Reserve Chairman Jerome Powell's opposition to cryptocurrencies during the announcement of interest rate cuts. Powell made bold statements in an interview that drew significant attention from the cryptocurrency community.
He stated, 'We are not allowed to hold Bitcoin and do not wish to change the law.' Following this statement, the prices across the entire cryptocurrency market have been declining.
Bitcoin (BTC) technical analysis and upcoming levels
Aside from these two speculations, another potential reason for the significant price drop is the breach of key support levels. According to technical analysis from CoinPedia, BTC has broken below the rising support level that has been maintained since early November 2024.
After this crash, the price of BTC fell by 6.5%, but found support at the $92,500 level and has started to rise again. According to recent price trends, if BTC fails to hold this level, it is likely to drop to $85,500. However, if the support level remains intact, the upward momentum may continue.
In the past three days, BTC has plummeted over 14%, with prices dropping from $106,600 to $92,600. This significant drop caused BTC to break below a critical rising support level that had been maintained since early November 2024.