The reason for Bitcoin's decline and its price falling below $62,000
The cryptocurrency market witnessed a major decline today, Monday, June 24, 2024, as the price of Bitcoin fell below $63,000, then rolled further below the $62,000 level.
This sudden decline led to the liquidation of more than 60,000 traders, and had widespread effects throughout the cryptocurrency ecosystem.
Bitcoin decline and its impact:
The price of Bitcoin, which is the largest cryptocurrency by market capitalization, fell to the level of $61,000, the lowest level in several weeks.
This decline resulted in losses exceeding $130 million for traders in one day, triggering a series of automatic liquidations on various trading platforms.
Current prices represent a continuation of the downward trend that began last week.
Bitcoin reached its weekly peak of $67,000 on Tuesday,
But it has since faced increasing selling pressure.
By Friday, the price had fallen to $63,500, with a temporary stabilization around $64,000 over the weekend, before a major drop on Monday.
Reasons for the decline in Bitcoin prices:
There are several main factors and reasons that contributed to the decline and correction of the market, perhaps the most prominent of which are:
Decrease in whale transactions: Large transactions witnessed a decrease of 42% over the past two days, from 17,091 to 9,923, which indicates a decrease in the activity of major players in the market, which affected the overall positive sentiment in the market.
Wave of withdrawals from derivatives exchanges: Some traders adopted a risk-off strategy and moved their assets away from trading platforms. This trend was reflected in the Interexchange-Flow-Pulse (IFP) index, which showed a negative flow of Bitcoin between exchanges and between spot products and derivatives, indicating a decline in confidence in the market.
Outflow from Exchange Traded Funds (ETFs): Last week saw a significant withdrawal from these investment vehicles, contributing to the overall downtrend of the market.
Broader Economic Context: The cryptocurrency market is facing pressure from the strength of the dollar, which is approaching a two-month high following the release of strong PMI data. The strength of the dollar makes alternative assets such as cryptocurrencies less attractive to some investors.
Currently, the market is closely monitoring the Personal Consumption Expenditures (PCE) Price Index data scheduled for release on Friday.
These data are considered a leading indicator of inflation and the Federal Reserve attaches great importance to them in making its decisions about future interest rates.
Although upcoming data is expected to show a moderate slowdown in inflation, it is expected to remain above the Federal Reserve's annual target of 2%, which could push the central bank to maintain high interest rates.
In general, high interest rates are a disadvantage for speculative assets such as cryptocurrencies, as they reduce the attractiveness of these investments compared to traditional options.
