The Bitcoin market witnessed a sharp decline today, with BTC plunging from $63,446 to $60,763 within a matter of hours, marking a notable 4.3% decrease in the past 24 hours. Additionally, Bitcoin has observed a 15% downturn over the last month since hitting a peak of $70,000.
This sudden slide is attributed to various factors affecting the U.S. economy and investor confidence.
Here’s an in-depth look for you.
Why is the Bitcoin Price Crashing?
U.S. Economic Indicators
Recent data on inflation and consumer sentiment in the United States have played a pivotal role in Bitcoin’s downward spiral. The University of Michigan’s report showcased a drop in consumer sentiment from 77.2 in April to 67.4 in May, hitting a six-month low and falling short of market projections.
Furthermore, inflation expectations for the upcoming year surged to 3.5%, hitting a six-month high, further exacerbating economic anxieties.
Cautionary Notes from the Fed Reserve
Statements from Federal Reserve officials have also added to the market’s uncertainty. Fed official Lorie Logan underscored the upward risks to inflation and stressed the necessity for policy adaptability, suggesting that a rate cut is premature. Similarly, Federal Reserve Governor Bowman emphasized the significance of maintaining policy stability over an extended period.
Outflows from U.S. Spot Bitcoin ETFs
Alongside economic indicators, there have been significant outflows from U.S. Spot Bitcoin ETFs, notably the Grayscale Bitcoin Trust (GBTC), surpassing $100 million on Friday. This movement mirrors investor apprehension amidst economic uncertainties.
$50 Million in Liquidations
The broader crypto market witnessed substantial liquidations, totaling over $156 million within 24 hours. This included $131 million in long positions and nearly $25 million in short positions. The market experienced more than $50 million in liquidations within just one hour, indicating a rapid and impactful shift in sentiment.
Bitcoin Price Correction Ahead?
Moreover, Michael van de Poppe, a prominent cryptocurrency analyst, has shed light on the ongoing final accumulation phase in Bitcoin’s market dynamics. This phase is characterized by periods of low volatility and erratic price movements, signaling a critical juncture in Bitcoin’s price action.
According to van de Poppe, Bitcoin is currently retracing towards a crucial support level. Failure to hold this level could lead to a deeper correction, with Bitcoin revisiting the $52,000 to $55,000 range.
If this range is breached, it would signify the final stage of the correction before potential bullish momentum resumes.
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