Bitcoin has dropped in value after a record growth. In just a couple of hours, the cost of Bitcoin fell by almost 15%, from 60 to 51 thousand dollars per 1 BTC, causing a record wave of forced liquidations of long positions, which turned into a colossal loss of almost 10 billion dollars for gullible traders.
In terms of the rate of decline, this was the strongest in the past seven weeks, writes Bloomberg.
Moreover, earlier this week, Bitcoin several times in a row updated the cost record and reached almost 65 thousand dollars. After such a rise, Bitcoin is likely to have entered a phase of correction, analysts say.
Bitcoin, like any cryptocurrency, is regulated by supply and demand. Accordingly, the higher the price of this cryptocurrency grows, if institutional investors don’t come there, the lower the demand for it, the fewer people can afford to buy it. There will always be a correction after a sharp rise in the rate, the question is how deep and tough it will be.
Negative fundamental background
Several unfavorable events occurred during the week. Which in themselves didn’t have a pronounced effect on the market, but created a snowball effect.
Experts attribute the decline in the Bitcoin rate to the prohibitive decision of the Turkish authorities. On Friday, it became known that the Turkish CB has banned the use of cryptocurrency to buy goods and services.
The second reason is the accident at a coal mine in the Chinese province of Sichuan, which provoked massive power outages. Since this region is home to the largest mining pools.
Thirdly, the popular P2P cryptocurrency exchange platform Localbitcoins began massively blocking user accounts on suspicion of money laundering or participation in illegal activities.
Finally, the decisive factor and trigger was the low liquidity typical of the weekend. Despite the fact that the cryptocurrency market is open 24/7, trading activity tends to drop on Saturday and Sunday. Experts believe that all this influenced the market sentiment.
Should we expect a quick recovery of Bitcoin?
Some market participants began to make predictions about the growth of the Bitcoin rate up to $ 100,000 in the very near future, which forced less experienced traders to open many long positions in the most popular digital currencies.
However, contrary to the forecasts of “experts”, the price of digital gold couldn’t even reach $ 65,000. And the next wave of correction provoked large holders to get rid of some of their savings, which collapsed the rates of the most popular cryptocurrencies by 10-15%.
However, traders called this moment a good time to buy digital assets.
They believe that Bitcoin is still positive in the long run. This is evidenced by a number of technical and on-chain indicators. Perhaps this correction will reduce the degree of overheating in the market and help the market to continue its growth.