Bitcoin (BTC) closed July with a dragonfly Doji candlestick formation, indicating that bulls faced strong resistance at the $70,000 level. The weak performance over the past two weeks has raised concerns about further corrections in the cryptocurrency market in August.
Decline in the Cryptocurrency Market
With the price drop, Bitcoin’s Fear and Greed Index fell from 74 (greed) to 52 (neutral), indicating a shift in market sentiment.
Altcoin market also followed a similar downward trend. The total value of the cryptocurrency market fell by over 3%, dropping to approximately $2.41 trillion. Along with this decline, about $200 million was liquidated in the leveraged cryptocurrency market, with a significant portion of these liquidations coming from traders holding long positions.
Main Reasons for Bitcoin’s Price Drop
Bitcoin showed a downward trend across the entire cryptocurrency market following the release of high-impact economic data on Wednesday. Specifically, Fed Chairman Jerome Powell noted that inflation in the U.S. had decreased over the past year but remained at high levels, triggering the decline. The Fed kept the benchmark interest rate at 5.50% but indicated that a rate cut could occur in September if inflation continues to fall.
Also on Wednesday, Fidelity’s spot Bitcoin ETF FBTC led with a net outflow of approximately $31 million, followed by ARKB with an outflow of about $4.6 million. At the same time, Grayscale transferred approximately $1.8 billion from GBTC to Mini Bitcoin Trust via Coinbase Prime.
Bitcoin has formed a downward trend after facing strong resistance around $70,000 in recent months, causing concern among investors. The largest cryptocurrency is confirming a daily reversal pattern with a double top and a downward trend in the Relative Strength Index (RSI). If Bitcoin’s price continues to fall in the coming weeks and breaks the support zone between $60,000 and $62,000, it could drop to $48,000.
This situation indicates that investors and traders need to closely monitor market sentiment and be prepared for potential price movements. As uncertainty continues in the cryptocurrency market, safe-haven strategies and risk management remain important for investors.
