TL;DR Breakdown:
- The crypto market dropped below $2 trillion following Bitcoin’s drop to $38k.
- Russia, stock market, and futures contract liquidation might have caused the drop.
- Meanwhile, some things haven’t changed for BTC.
The cryptocurrency market is still deep into the hand of bears, per se. Early Thursday, the leading cryptocurrency Bitcoin (BTC) was gradually pushing to the upside: a move followed by some other major cryptocurrency, including Ethereum. However, prices came crashing again just as Bitcoin faced a rejection towards the $43,500 level.
After touching $43,500 yesterday, Bitcoin dropped 12 percent to $38,235 – last seen in August of 2021. Likewise, major altcoins, including Ethereum and Solana, were affected, causing a cascade of liquidations of about $716 million positions in the futures market and the current 7.28 percent drop in the overall cryptocurrency market cap.
Why is Bitcoin falling?
The stalling and declining price of many digital currencies this past month clearly defines a bear market. However, some people believe there could be some extra behind the recent drop in Bitcoin, which probably dragged other altcoins.
On Thursday, the central bank of Russia proposed banning cryptocurrency trading and mining. Although some blame this for the retracement in the market, it’s also worth mentioning that the bank has been mulling over banning crypto-related activities in the region for quite some time now, despite the president and some government officials speaking on the possible use of crypto in the country.
The value of crypto positions liquidated might have contributed to the downtrend. Besides, all markets are heading south, including tech stocks on NASDAQ, which are currently facing a correction.
Cryptopolitan called this downtrend in a recent article published on January 19. With Bitcoin crossing $42,000, we predicted that the price could drop lower given the selling pressures ahead. Some things haven’t changed for BTC. So, we can expect Bitcoin to recoup losses in the coming weeks.
What hasn’t changed for Bitcoin?
Bitcoin balance on exchanges hasn’t increased, despite the unstable prices in recent weeks. Following the data from CryptoQuant, there are currently 2.375 million BTC on all crypto trading platforms, which somewhat indicates scarcity. Additionally, the BTC hashrate is currently at an all-time high.
The fear & greed index currently reads “19,” which indicates that investors are extremely fearful – a good buying opportunity, as many experts believe. BTC moves mysteriously. It remains to be seen whether the price will collapse or rise from the current price of $39,132.
