Bitcoin price expectations of a decline had started to form less than 24 hours ago, and we issued early warnings. While the Bitcoin price was still at $69,500, we advised investors to be cautious. Then, without much delay, the decline began in the early morning. So why did it fall, and what happens now?
Why Did Bitcoin (BTC) Fall?
BTC price fell from $69,500 to $66,000 in the early hours of the day. A few hours after the US markets opened, the price further dropped to $64,550. The main reason for this decline was dominant sell-offs in the ETF channel. Spot Bitcoin ETFs did not start April well, leading investors to reduce their risks.
On the other hand, the movement of Silkroad assets today triggered the second wave of decline. Although investors may have forgotten, FUDs like MTGOX and Silkroad still whet the appetite of the bears.
Moreover, as trading volumes decrease, long-term investors continue to take profits. The supply held by short-term investors has climbed to levels seen on July 26, 2021. This suggests that weak hands might offload their holdings much faster in the event of sudden price drops.
Will Cryptocurrencies Rise Again?
ETF demand could recover in the short term, potentially ending the downturn. An early signal of this will be an increase in volumes from BlackRock and Fidelity. However, analysts continue to seek clues from historical data. Comparisons with previous halvings can give us some ideas about the current period.
According to historical data, a five-stage block reward halving scenario comes into play 18 days before the halving. Crypto analyst Rekt Capital believes the ongoing price movement could be a repeat of BTC‘s performance during the 2016 and 2020 periods.
In the 2016 and 2020 periods, BTC dropped by 38% and 20%, respectively. Considering the Bitcoin price has been rising continuously for 7 months, it should not be surprising to see such significant drops again, even in an environment where everyone says “this time it will be different.” The scenario for a deeper decline in the king cryptocurrency starts with the loss of the critical $60,000 support. However, to continue the rally, we need to see closures above $69,000 and surpass $73,777. Still, since no one can see the future, we have no choice but to live and watch.
