Bitcoin and altcoins are experiencing massive sell-offs in the first hour of the new day. BTC price reached $25,000 after a long hiatus. Investors have been bombarded with a plethora of negative news in the past 24 hours. The last straw was the Evergrande bankruptcy. So, what will happen next?
The Current State of Cryptocurrencies
After dropping to $25,166 on the Binance exchange, the Bitcoin price was at $26,200 at the time of writing. Many altcoins are facing losses exceeding 10%. The warnings issued for weeks have come true. Experts have been saying that we have reached the end of a shallow volatility period. Moreover, most of them were confident that the price would break downward.
Just when we needed the news to trigger this decline, it happened. The drop gained momentum as the BTC price lost the levels of $28,800 and $28,300. Finally, a pin was dropped on the 15-minute chart support at $25,500, and for now, it seems that buyers have returned to the game.
Why Are Cryptocurrencies Falling?
The decline in the Bitcoin price has several reasons. First and foremost, technical analysis readings indicated that this drop was a matter of time. Since the price could not close above $29,700 and encountered significant selling pressure at resistance levels, dropping to $25,000 was not surprising. Most experts believe that after testing the $25,500 support, the price will enter a recovery phase. Although the second stage seems to have started for now, time will tell if it is a definite turnaround.
The main reasons for the decline in cryptocurrencies can be listed as follows:
- Fed imposed sanctions on the bank associated with Alameda, and the decline started with this.
- We learned that SpaceX sold hundreds of millions of dollars worth of BTC.
- The thing that accelerated the decline was the recent last-minute news of the Evergrande bankruptcy application. We warned about bigger losses in this last-minute development.
- The possibility of the US Department of Justice filing a lawsuit against Binance
- Withdrawal of market makers from centralized exchanges
- Institutional investors turning away from crypto due to regulatory uncertainty
- Possible bankruptcy of Genesis and its dragging of DCG along
- Confirmation that the Spot Bitcoin ETF approval will not come in 2023
- SEC initiating the appeal process for Ripple’s summary judgment
- Lack of volume in the market
And many more reasons supporting the decline can be mentioned.
