Bitcoin has been on the decline for several weeks now with experts questioning the reasons as to why that is the case. This is also because there are a lot of users here who have deeply invested their time and money in Bitcoin.
As the leading crypto in the market, it’s quite a scare to think that it has yet to recover for the past few months. With its volatile nature, a lot are expecting for its value to increase once again.
What are the reasons for the shambles and will BTC regain the people’s trust back and start rising in value again? If you are into Bitcoin casino games, trading, and investing, it is best to know the reason behind its decline in value to avoid losing a huge amount of money in the long run.
During the COVID-19 pandemic, various countries offered a variety of incentives to help their ailing economies. Many saw this as the beginning of an endless cycle of printing money, which led to high inflation rates.
The Bureau of Labour Statistics (BLS) revealed that the Consumer Price Index touched an all-time high of 8.5% last month, shattering a 40-year record once again.
The Federal Reserve has begun raising interest rates to combat growing inflation, with the most recent increase equating to 0.5%.
Markets have been eroding steadily over the previous few weeks. The severity has only intensified in the last few days as a result of the general anxiety produced by growing prices.
A comparison of market indices shows the S&P 500 down over 4%, the Dow Jones Industrial Average (DJI) over 6%, and the NDX down 6.2% since May 2022.
Coins, even though they are independent of conventional stock markets, are commonly seen as a risky asset because of this association. These tend to be liquidated first in times of instability, which explains the recent turbulence in the price.
Key investors selling big
According to Glassnode’s data, today’s exchange inflow volume hit a 3-month high of 1,755.021 BTC when adjusted for a 7-day moving average. This is a sign that the market’s biggest players are selling their coins to prepare for a lengthier decline.
This is backed up by a study from CryptoQuant, an analytics site. According to the report, large players and whales that contributed between 10,000 and 15,000 BTC to exchanges are showing more concerning behaviour than ordinary investors.
It also stated that this may be the effect of larger investors reducing their crypto-related risk-on holdings to protect their stock investments.
On May 4th and 5th, Glassnode disclosed that over 26.5K BTC ‘worth of open interest’ was added to the market during the rise, but virtually all of it (approximately 25K BTC) was closed out during the following sell-off.
BTC’s technical indications, on the other hand, aren’t exactly stellar. CryptoPotato also announced that the cryptocurrency had a six-week losing streak and has started the seventh one with a drop.
As a result, the market hasn’t seen this in eight years and this indicates that investors are taking profits.
The fees to reward ratio is an additional measure to keep in mind. According to economists, the data reveals that it has fallen dramatically from the last all-time high—a signal of an imminent bear market.
It also hit a two-year high in the number of addresses that were lost. Many investors offered a lot of liquidity at the $37,000 level. Now that’s gone, purchasers may be looking at the $30K range next instead.
These factors have combined to create an atmosphere of utter panic in the market. On January 25th, the mood was just as gloomy as it is now.
As you can see, there are a lot of technical factors that drove BTC’s prices down. If you’re a fan of Bitcoin casino games, it’s important to know why Bitcoin’s value dropped. Hopefully, this will only be temporary as BTC rises up again.