Today Bitcoin market experienced a significant price decline. BTC fell from $63,446 to $60,763 within hours. Moreover, it recorded a decrease of 4.3% in the last 24 hours. Additionally, Bitcoin has fallen 15% since reaching $70,000 last month. It is possible that this sudden decline can be attributed to various factors affecting the US economy and investor sentiment.
Various Reasons for Bitcoin’s Fall
US Economic Indicators
Recent data on inflation and consumer sentiment in the United States played a significant role in Bitcoin’s downward move. According to the report of the University of Michigan, the consumer sentiment index, which was 77.2 in April, fell to 67.4 in May, falling to the lowest level in the last six months and remaining below market expectations.
Additionally, inflation expectations for the coming year rose to 3.5%, reaching a six-month high. This increased economic concerns and caused volatility in the markets. The decline in consumer sentiment and high inflation expectations may increase investors’ risk aversion. This is also likely to affect the value of assets like Bitcoin.
Such data provides important information about the economic outlook and market expectations. These are factors that should be taken into account when assessing investors’ risks. Following the developments in the market and making fundamental analysis, cryptocurrency and is important to understand its effects on other asset prices.
Warning from the Fed Central Bank
Statements from Federal Reserve officials also contributed to market uncertainty. Fed President Lorie Logan drew attention to the upside risks to inflation and emphasized the need for policy flexibility, stating that a rate cut was premature. Similarly, Federal Reserve Chairman Bowman emphasized the importance of maintaining policy stability over a long period of time.
Outflows from US Spot Bitcoin ETFs
In addition to economic indicators, outflows from US Spot Bitcoin ETFs, especially Grayscale Bitcoin Trust (GBTC), exceeded $100 million on Friday. This move reflects investor caution in the face of economic uncertainties.
50 Million Dollar Liquidation
The broader crypto market experienced significant liquidations totaling over $156 million in 24 hours. This includes a long position of $131 million and a short position of approximately $25 million. More than $50 million was liquidated in the market in just one hour. This indicates a rapid and effective change in sensitivity.
Correction Possibility in Bitcoin Price is Possible
Additionally, Michael van de Poppe, a leading cryptocurrency analyst, highlighted the recent accumulation phase ongoing in Bitcoin’s market dynamics. drew. This phase is marked by periods of low volatility and choppy price movements, marking a critical point in Bitcoin’s price movement.
The final accumulation period is still happening.
That includes: low volatility & chop. #Bitcoin Dropping back to the important area of support.
Note holding? Then we’re looking at $52-55K which would be the final stage of the correction. pic.twitter.com/F3o7UvL6jq
— Michaël van de Poppe (@CryptoMichNL) May 10, 2024
According to Van de Poppe, Bitcoin is currently retreating towards an important support level. Failure to maintain this level could potentially lead to a deeper correction. Therefore, BTC is likely to revisit the $52,000 to $55,000 range.
If this range is reached, it would signal the final phase of the correction before potential bullish momentum resumes.
