The cryptocurrency market was changed earlier this week by a spectacular plunge in the cost of Bitcoin, which dropped below the $60k mark. This dramatic fall led to the liquidation of over 60,000 traders, causing primary disruptions in the crypto ecosystem. Why such a fall?
This Monday morning, the crypto market experienced a high shock when the cost of Bitcoin abruptly dropped from over $64,000 to less than $62,500 in a matter of hours, reaching its lowest position in several weeks. This fall led to the liquidation of over 60,000 traders, totaling losses of more than $130 million in a day. Traders were caught off guard by this quick descent, exacerbated by a series of automatic liquidations on trading parts.
This sudden decrease comes after an already weak week for Bitcoin. The queen of crypto had gained a weekly high of $67,000 last Tuesday, but bearish trends fastly took over, pushing the cost to $63,500 on Friday. The weekend was relatively cool, with Bitcoin stabilizing around $64,000, before the Asian markets opened on Monday morning, causing another high fall.
Several elements likely underlie this sudden fall in Bitcoin. One could mention the major drop in whale transactions. Over the last two days, these transactions have decreased by 42%, falling from 17,091 to 9,923. Above that, there’s been a wave of withdrawals. Indeed, some users on derivative exchanges have gone into a “risk-off” position, meaning they’ve decreased their danger exposure by withdrawing their assets from derivative platforms. The Interexchange-Flow-Pulse (IFP) indicator, which tracks Bitcoin actions between spot and derivative exchanges, has turned red and signals a decrease in market confidence.
At the same time, the market was also affected by huge outflows from spot ETFs. The last week was marked by outstanding outflow. This outflow dynamic has evidently affected the bearish pressure on the cost of Bitcoin.
For the month, bitcoin dropped nearly 10%. At the begin of June, it highly touched the $71,000 level but has been on a steady decrease since. It has been largely stuck in a low range between $60,000 and $70,000 since the mid of March when it arrived its all-time high of $73,797.68.
Traders and analysts are confident the cryptocurrency will repopped and notch another record this year. Ryan Rasmussen, an Investor at Bitwise Asset Management, called the cost action “bullishly choppy.”
“There’s a demand-changing tailwind behind crypto that isn’t reflected in the choppy cost movement on a week-to-week basis,” he said, pointing out bitcoin’s more than 40% year-to-date get, progress on ether ETFs and crypto’s political tides changing in its favor.