The past week has been a wild ride for the cryptocurrency market, especially the Bitcoin price (BTC). Prices dropped over 10% on Saturday, April 13, sending shockwaves through the crypto ecosystem. This dramatic decline has reignited debates about Bitcoin’s volatility and its relationship to traditional markets and geopolitical events.
Geopolitical developments affect the market
While the exact cause of the crash remains unclear, many analysts point to increasing tensions between Iran and Israel. News of an Iranian drone strike on Israel following Israel’s alleged attack on an Iranian consulate in Syria coincided with the market decline. This geopolitical uncertainty has led investors to safer havens, causing a sell-off in risky assets such as Bitcoin. But other factors likely contributed to the market correction:
- Options expiry: The expiry of major Bitcoin options contracts on Friday may have triggered selling pressure to manage risk.
- Pre-halving jitters: With the upcoming Bitcoin halving, some investors may be taking a cautious approach, anticipating the historic price declines observed before previous halving events.
- Macroeconomic concerns: Rising inflation and possible interest rate hikes by central banks may reduce investors’ appetite for risky assets such as cryptocurrencies.
- Technical chart weakness: Technical analysis of Bitcoin’s price chart may have pointed to vulnerabilities that have caused some investors to anticipate a correction.
Liquidations and panic selling continue
The market crash resulted in liquidations of over $2 billion in various cryptocurrencies. This includes a significant portion of the long positions of investors who think the Bitcoin price will rise. Panic selling further exacerbated the price decline, sending Bitcoin down to $60,660. Analysts are divided on Bitcoin’s short-term and long-term outlook. Some, like Rekt Capital, believe this is a temporary pullback needed to slow down the current bull cycle and bring it closer to historical trends.
Others, such as Benjamin Cowen, argue that the market is trying to correct previous unsustainable gains. However, concerns remain regarding the potential impact on the Decentralized Finance (DeFi) sector, where liquidations could cause cascading effects. Despite the volatility, some investors, especially whales (large shareholders), are taking the opportunity to buy Bitcoin at a discount. This “buy the dip” strategy reflects long-term belief in Bitcoin’s potential. However, many people remain cautious until market indicators paint a clearer picture.
Altcoins were also affected by Bitcoin price
ETH price dropped another 9%, pushing the price below $3,000. This caused the declines of SOL, XRP, ADA, DOGE, SHIB and other altcoins to increase by up to 20-50%. As ETHBTC drops to 0.46 levels in 2021, analyst Benjamin Cowen predicts that ETH/BTC could hit bottom this summer. In the last cycle, ETHBTC bottomed after the first interest rate cut after breaking support. Then, “it fell continuously for 2 months, then it bottomed out.” said.
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