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The price of Bitcoin has fallen to $88,522, which is the lowest level in 7 months. Due to this, the value of the global crypto market decreased from $4.3 trillion to $3.2 trillion, which means investors have suffered a loss of more than $1 trillion.
This decline has been 25-30% in the last 6 weeks. Analysts say that this situation has been created due to low expectations of Fed rate cuts and liquidations and it can go up to $ 75,000.
How did Bitcoin crash?
Bitcoin touched a high of $126,000 in October. After this, there was a sharp decline in its price when it started breaking below the support level of $92,000.
Following this, there was massive liquidation in futures and leveraged positions and positions worth about $19 billion were closed. This has caused Bitcoin to fall by more than 25% in the last 6 weeks, with a total decline of 30% from the year’s high of $126,000.
Automated trading and high leverage in the market further accelerated the decline. Initially there were concerns over AI spending, but there was a slight recovery after Nvidia’s strong revenue report. Bitcoin showed a recovery of 1.9% on Thursday morning London time, but the market is still uncertain.
What was the impact on the market
The total value of the crypto industry was at a peak of $4.3 trillion on October 6, but now it has settled at $3.2 trillion. That is, it has reduced by 1.1-1.2 trillion dollars. Most of the losses are paper losses, i.e. from price re-pricing and liquidations.
$19 billion of leveraged positions were liquidated on October 10, leading to margin calls, ETF outflows and a lack of new buyers. Everyone from retail investors to digital asset firms have been affected.
Altcoins were more affected, with Ether falling below $3,000. In August, Ether reached $5,000, which was above the record for 2021, but now those gains have disappeared. Stock premiums for digital asset firms also evaporated. Everyone from retail investors to institutional players were affected.
5 main reasons for decline
- Expectations of Federal Reserve rate cuts weakened, putting a brake on institutional adoption.
- Treasury yields rose, financial conditions tightened and risk sentiment weakened.
- Weakness in the tech and AI markets is also impacting crypto.
- Geopolitical uncertainty and automated trading increased volatility.
- Long-term holders are accumulating, but short liquidity has made the market fragile.
what could happen next
If Bitcoin sustains below $88,000-90,000, it may fall to $75,000. Currently, the key levels of $85000, $80000 and April’s low of $74,425 are in focus. Put activity has increased around 80,000 on options desks, which shows hedging. Some experts say that tech revenue guidance may lead to recovery, but macro data is awaited. Institutional adoption can bounce back in the long term.
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