3 Possible Reasons Behind Bitcoin’s $10,000 Weekly Price Drop

The ever-volatile cryptocurrency market was hit again this week from different sides, but most of it could be connected to the United States.

Here are some of the possible reasons why BTC poured ten thousand on Monday morning.

US economy weak

The week started on a high note as the price of bitcoin soared by $3,000 on Monday and touched $70,000 for the first time since early June. This came just one day after Donald Trump appeared at the 2024 BTC conference in Nashville, where he made some big promises, including saying he would fire SEC Chairman Gary Gensler on his first day in office.

Being pro-bitcoin and crypto now, his words had a positive effect on the entire market, but this was short-lived. Later on Monday, BTC fell into the four thousand and continued to decline at the end of the week. In fact, the cryptocurrency fell to $62,200 on Friday evening after the United States released its July jobs report.

It suggested the world’s biggest economy could be in a more worrying state than many thought, as the unemployment rate had soared to 4.3%, the highest since October 2021 .Wall Street reacted with immediate price drops, but so did crypto.

However, BTC and altcoins continued to fall over the weekend due to their ability to trade 24 hours a day. The biggest digital asset fell to a 3-week low of just under $60,000, losing more than ten thousand in less than a week.

The next step of the Fed

As mentioned above, the reasons listed are entirely related to the US. In this case, we will focus on its central bank and its highly anticipated next move.

Earlier this week, the Bank of England cut the country’s interest rates by 0.25 basis points in the first cut since the pandemic. The UK central bank thus joined other prominent institutions such as the ECB and the Bank of Canada in cutting rates.

However, the US Federal Reserve continues to postpone this move and rates are at a multi-decade high of 5.25% to 5.50%. However, pressure on Fed Chairman Jerome Powell continues to mount as Democratic Sen. Elizabeth Warren urged him to cancel his vacation plans and cut rates now rather than wait until September , when most experts believe the reduction will occur.

Lower interest rates are generally perceived as bullish for risky assets like crypto, as they make borrowing cheaper. As such, this uncertainty about the Fed’s next move could be one of the reasons why some investors have decided to leave the crypto market, at least for now.

ETF exits

The two reasons mentioned are actually very related to this one. Reports of a weak U.S. economy and uncertainty surrounding the Federal Reserve’s actions have spooked some investors, especially the larger ones — those who typically use ETFs to gain exposure to crypto.

As reported on Saturday, outflows from Bitcoin ETFs soared to nearly $240 million on Friday, the highest in about three months. Ethereum ETF withdrawals continued in the red for the second week in a row.

ETF flows have shown in the past that they could have an immediate impact on the price of BTC, especially outflows. Consequently, they could be one of the main reasons for the asset’s fall to and below $60,000.

If you want to check how low BTC can go during this correction, you can read this article.

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