In the last approximately half an hour, the BTC price experienced a drop of roughly 600 dollars. What happened during this time that started the decline? Firstly, NASDAQ recently hit an all-time high (ATH), secondly, FTX parties announced a settlement, and lastly, Fed member Barkin made some statements. Let’s quickly address these three factors.
Why Is Bitcoin Falling?
Firstly, the FTX settlement aims to pool assets in the Bahamas for customer refunds. However, customers will not receive their refunds in cryptocurrency. Despite prices having surged many times over, payments will be made in dollars at exchange rates close to those during the crash period. This is definitely frustrating and also means the continuation of billion-dollar sell pressure. This was the first cause of the BTC decline. The market is pricing in the initial shock of the large potential sell-off.
The second reason is that NASDAQ saw an ATH, which may indicate that the market is overly inflated. If the peak occurs before interest rate cuts begin and historically stocks fall when cuts start, what should we expect? Likely new lows in 2024.
Lastly, Fed member Barkin made some statements and mentioned inflation. This could have supported the drop in BTC price. Key sentences from his statements were:
“I think inflation is more stubborn than an average Fed official would anticipate. The Fed is well-positioned considering the outlook of the economy. I am seeing signs of weakening in some parts of the consumer economy. I expect inflation to cool down further. Inflation data is moving in the right direction. We are making good progress.”
